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Tenants liable to pay tax for non-resident landlords

Tenants of non-resident landlords are obliged to pay the landlords' tax liabilities of 20 per cent of rental income or face penalties and they could be completely unaware of the rule. The provision of the tax rules was confirmed in early February 2008 by Minister for Finance Brian Cowen in a written reply to a parliamentary question submitted by TD Ciarán Lynch who is the TD for Cork South Central. Brian Cowen said "However, non-compliance by individual tenants can be innocent in some cases because they genuinely may not know the tax residence status of the landlord". Ciarán Lynch said that "there was no possible justification for continuing the scheme whereby tenants who are paying rent to a landlord who lives outside the jurisdiction are required to withold 20 per cent of the ir rent and to forward it to the Revenue Commissioners on the landlord's behalf. The system places far too onerous a responsibility on the tenant to record and pay tax owed by somebody else".

Private Residential Tenancies Board of Ireland  

On the 1st December 2004 the Residential Tenancies Act 2004 came into full effect. The act includes a requirement for Landlords to register their tenancies and introduced new procedures for resolving disputes.

The Private Residential Tenancies Board (PRTB) is an organisation that has been set up by the Government. Its main role is to provide a dispute resolution service for landlords and tenants. The mediator helps landlords and tenants to come to an agreement that works for both of them. The PRTB is als0 responsible for tenancy registration and from September 2004 all landlords have had to register new tenancies with the board. Disputes will be arbitrated by this body rather than the courts.  

Registration: There are currently over 140,000 Landlords in Ireland and they have to register their tenancies.

All existing tenancies should have been registered with the PRTB by the 1st December 2004.

All new tenancies must be registered within one month. Landlords must also inform the board if they replace one tenant with another or if they change the rent within one month of the changes being made.

What does it cost to register? A single tenancy will cost €70. If a Landlord registers a number of different tenancies in a single building at the same time the fee is €300. If there is a change in the tenancy there is no fee, however the fee for late registration is €140.  

The requirement to register only arises where a new tenancy is created and a revised rental must be updated in the register within a month and no further fee will be payable.

The PTRB is going to rigorously pursue compliance by Landlords with the registration requirement. If they do not register, on conviction could receive a, fine of up to €3,000 or 6 months imprisonment. Once the tenancy has been registered a Tenant and landlord will be issued with a registration number by the PTRB. 

Exemptions to new Legislation: The following are exempt - Business premises, a dwelling occupied under a shared ownership lease, a holiday let, a dwelling in which the landlord is also resident or where the spouse, parent or child of the Landlord is resident and there is no written lease or tenancy agreement.  

Revenue Commissioners: The PRTB board will supply specific details about named individuals if requested to do so by the Revenue. There is no provision for Revenue to gain blanket access to the PRTB's database.

The landlord's Ability to set Rents: Under the act, it is illegal for a landlord to demand rent that is greater than the open market rate or to seek a rent review within a year, unless there has been a substantial change in the nature of the accommodation. Tenants who feel that either their initial rent or proposed new rent is greater than the market rate can refer the matter to the PRTB board.

Security of Tenure: Tenants who have been in continuous occupation of a property for six months have a qualified right to remain there for a further three and a half years (Under Part 4 Tenancies).  

Landlords can seek vacant possession for the following reasons: They want to use the property themselves - They want to sell it - Tenants have breached tenancy obligations - Major refurbishment - Required by a family member. Tenants are entitled to request that they be given first refusal should the family member only stay for a short period or following the completion of the refurbishment.

If the rent is at least 28 days in arrears, the Landlord can recover possession of the property without giving notice (see below).

Notice Periods: This will vary according to the length of tenancy. The Notice for Tenants. is the same except for tenancies of 4 years or more when the Landlord has to give 112 days and the Tenant 56 days. The other notice periods: less than 6 months 28 days - 6 months, but less than 1 year 35 days, 1 year or more, but less than 2 years 42 days - 2 years or more, but less than 3 years 56 days - 3 years or more, but less than 4 years 84 days.  

Disputes between Tenants and landlords: If there is a dispute, the matter can be referred to the PRTB board's dispute resolution service by either party. Third parties who may be affected by issues relating to the tenancy can also register complaints (a neighbour living besides noisy tenants. The board will examine a range of issues including the refund or retention of deposits, breaches of tenancy obligations etc.

The dispute resolution service has two stages. Stage one is mediation or adjudication. Stage two is a hearing by a tenancy tribunal. If both parties agree to mediation the board will appoint a mediator.

If either party declines to use the mediator service, or if the board considers that would not be suitable then an adjudicator will be pointed. In most cases you can no longer take a dispute case to the Circuit Court and the PRTB Board has taken the court's place.

The Board may award damages of up to €20,OOO and in arrears of rent up to €20,OOO or twice the annual rent, whichever is greater (but a maximum of €60,OOO applies to rent arrears awards) Cases involving higher amounts, will have to be taken through the courts.  

Costs of dealing with disputes: The fee for an initial application for mediation or adjudication is €25 while the fee for referring a dispute to a tenancy tribunal is €40. The €25 fee is applied to those disputes which the board feels should be referred directly to the tribunal.  

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Holiday rental income is subject to VAT at 21 per cent. For other rentals the Income tax rates can be as high as 42 per cent with other charges of up to 5 per cent applicable

N.B. This information should not be relied on for accuracy and is presented here without the responsibility of jml Property Service and the website it is being displayed at. © jml property Services 12.04      

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Deposits in rental properties in Ireland

One of the major problems with a property rental is on the deposit issue. So far of the 70 disputes determined by the PRTB - Private Residential Tenancies Board one third have related to deposit disputes.

These come from the condition of a property at the end of a tenancy. The problem is often over conflicting views on what is considered to be "fair wear and tear". What is acceptable wear and tear would be grubby marks on the walls and slightly worn carpets (but how worn can depend on the length of a tenancy).

Under the Residential Tenancies Act 2004 normal wear and tear should be assessed as "having regard to the time that has elapsed from the commencement of the tenancy, the extent of the occupation of the dwelling that the landlord must have reasonably foreseen would occur". This means normal wear and tear will vary from tenancy to tenancy.

If the landlord considers that the tenants obligations under Section 16(f) of the Act are not sufficient, then it is open to them to include additional or more specific requirements by way of a letting agreement.

A housing representative advises that tenants should ensure the property is cleaned before they leave to avoid argument. One of the best ways of course (although can be expensive) is to employ professional cleaners and provide the landlord or agent with a copy of the receipt.

A common problem is condensation (see Condensation ) If a property is prone to condensation problems and the landlord has not made sure it is properly ventilated it is not fair to blame the tenant, however tenants should take some responsibility themselves and make sure they open windows in bathrooms and kitchens or report defects that the windows won't open (when there are windows) or that extractor fans are not working.

Threshold ( the voluntary organisation in Ireland that provides information provides advice, information and support to all citizens on housing rights in Ireland.) dealt with 190 cases of deposit disputes in 2005.

The landlord can specify particular requirements in the letting agreement , but tenants must agree to these before they sign the lease. They should also agree an inventory with condition of each item (including the structure - building as well as furniture and fixtures) and sign this at the start of the letting and at the end. If items are broken at the commencement and are listed in writing then they cannot be claimed by the landlord at the end of the tenancy. (See also Inventories in theUK ) & ( TDS Tenancy Deposit Scheme )

N.B. This information should not be relied on for accuracy and is presented here without the responsibility of jml Property Service and the website it is being displayed at. ©jml property Services 01-06

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