If you are thinking of becoming a landlord in the Republic of Ireland, you will need to to follow certain rules and regulations. This succinct roadmap covers the essentials – from legal obligations to financial considerations. Whether you’re a first-timer or an old hand at property letting, read on to ensure that your next let is a smooth experience.
Decide if you will use a letting agent
One of the first considerations with an investment property is deciding whether to manage the property yourself or to use the services of a letting agent or management company. Things to consider are whether you will have the time and/or resourced to respond to tenant problems or carry out maintenance on your property. If you do not live close to the property, self-managing may not be a viable option. The decision to manage the property yourself depends on your individual circumstances and the amount of time you can devote to it.
Set a goal for your rental income
Be pragmatic about the potential rental income from your property. Research rental levels in the local area and consider that there will be void periods (times when the property may be empty) between tenancies. Factor in the cost of maintaining the property and its contents. Remember that owning an investment property will require ongoing effort in both property management and financial planning, including the completion of required tax returns.
Furnish the rental property well
A quality fit-out doesn’t have to break the bank. The way a property is furnished significantly impacts its marketability, so avoid using outdated, damaged, or mismatched furniture. Well-presented properties not only rent more quickly but also tend to retain tenants for longer periods.
Have the correct insurance
The insurance risks associated with letting residential property can be substantial and are different to that of owner-occupiers. Do not under estimate the importance of having the right insurance for your investment property. Some landlords make the mistake of relying on normal household cover, but this is not adequate. An investment property requires specific investment property (buy-to-let) insurance.
With the high levels of inflation currently experienced in Ireland, many property owners are at risk of being underinsured. It isn’t the market value that you insure for, but the total cost to rebuild or reinstate the property. Under-insurance occurs when the sum insured on a property is less than the amount it would cost to rebuild or replace the property. Where a policyholder is deemed to be under-insured, the insurer may be able reduce the sum it pays against the claim, in proportion to how much the policyholder is under-insured.
Screen potential tenants
Tenant screening is crucial, but it’s equally important to ensure you’re not discriminating against potential tenants based on gender, race, religion, or any other legally protected characteristics. Always exercise due diligence. It’s a good idea to talk to the prospective tenant and establish why they are moving, how long they were at their previous address, and how they plan to cover the rent. Check their identity with a passport or diving licence. Verifiable references from their current employer and current landlord help you to establish if they are reliable. Recent bank statements help to confirm that they can afford the rent. You can also check the RTB website for tribunal or adjudications that applicants may have been involved in previously. You don’t want a property sitting empty, but accepting the first application that comes along could be a decision you live to regret.
Have a lease agreement and an inventory
A good lease agreement is essential to the effective management of investment property and it helps to avoid disputes and disagreements during the course of the tenancy. Never let a tenant move into a property without a signed lease agreement. The lease agreement forms the basis for the landlord-tenant relationship for your property; you can download a template from the RTB website.
An inventory is the itemisation of the contents of the property. Every landlord should have an inventory for each property as it outlines not only what is in the property, but also what condition the contents are in at the time of letting. Both the landlord and tenant should agree that the inventory is accurate, which you do by signing it at the beginning of the tenancy. This can help to prevent disputes when tenants move out.
Know the rules
The residential letting market in Ireland is governed by the Residential Tenancies Act 2004, which also established the Residential Tenancy Board (RTB) to resolve disputes between landlords and tenants and to operate a system of tenancy registration. Landlords and tenants may refer disputes to the RTB for resolution.
The act sets out basic tenancy obligations for both landlords and tenants. It is not possible to contract out of these obligations (i.e., the act overrides the terms of any tenancy agreement). It is important that every landlord understands the main provisions of the Residential Tenancies Act 2004 and the impact this has on areas such as registering tenancies and serving notice on tenants.
Register with the RTB
Annual tenancy registration came into effect from 4th April 2022. This means that landlords must register their tenancy every year, within one month of the anniversary of when that tenancy began. The cost to register tenancies is currently €40 per year for private rentals, cost rentals and Student Specific Accommodation (SSA) rentals. The most efficient way to register your tenancy is by using the RTB’s online tenancy registration system, although it is possible to complete a paper form.
The following information is needed to register a tenancy:
- Rented dwelling address including Eircode
- Dwelling type (i.e., whole of house, apartment, flat bedrooms)
- Bed spaces and number of occupants
- Approximate floor area in square metres
- BER cert rating (if applicable)
- Local authority in which rented dwelling is located
- Tenancy commencement date
- Landlord: name, address, PPSN
- Tenant: name, PPSN
- Authorised agent (if applicable): name, address, CRO number, PPSN
- Management company (if applicable): name, address, CRO number
Manage your finances
Get a reliable accountancy firm to assist you with the preparation and filing of your landlord tax returns. You must to make a tax return every year. Rental income is liable to income tax, but you are allowed to offset certain expenses. We recommend opening a separate bank account for rental property income and outgoings (your tenant should set up a standing order to pay the monthly rent to your account). Keep accurate records of all income and expenses relating to the property, including all receipts. We also suggest you build up a contingency fund so that you can cover your costs when the property is empty or to pay for unexpected repairs and maintenance (for example, a new heating boiler).
Be a good landlord
Last but not least, be professional and business-like in your dealings with tenants. Respond promptly to phone calls or messages from tenants. Fulfil your legal obligation to deal with repair or maintenance problems without delay. Provide tenants with emergency contact details and adhere to the RTB’s dispute resolution procedures should disagreements arise. Respect their privacy; after all, it’s their home, not yours.
If you’re a landlord looking for support filing your landlord tax returns, we can help. Many landlords are not aware of all the ways they can reduce their tax liability. We ensure you are using all the available allowances and that your returns are filed on time. We are based in Balbriggan and Dublin, and provide landlord tax return services across Dublin, Meath and Louth.