Wednesday 17 July 2019

Ask Sinead Ryan: What rights do we have to charge a market rent on our granny flat?

'A trust in your will is a complicated structure and one where taxation needs to be properly considered'
'A trust in your will is a complicated structure and one where taxation needs to be properly considered'
Sinead Ryan

Sinead Ryan

Q We have a ‘granny flat’ as a separate building beside our house which is a selfcontained unit. We had let it to a family friend for many years at a peppercorn rent just to cover utilities and he in turn provided a security presence, and also did painting/repairs etc, for us over the years. He is now moving on and we wish to rent out the place on a more formal footing. My concern is over the rent pressure zone we are in — 4pc above his very low rent would not make any difference but what rights do we have to charge a market rent?

A Technically speaking you are a landlord, and therefore my reading of it is that you are in a bind. The RPZ rules are quite strict. However, I asked Stephen Faughnan, chairperson of the Irish Property Owners’ Association for his view.

“It would appear that the self-contained unit would be up to the standard of accommodation necessary to rent. You say that the reason for the peppercorn rent, apart from friendship, was also for services rendered, i.e. security, maintenance of premises, etc.

Peppercorn rents are a legal contract that require each party to provide consideration, something of value, to the other for the contract to be binding and it does not necessarily have to be currency.

This being the case, on the basis of the information presented, I feel that you would be entitled to let the property at the current market rent and in keeping with current legislation. However, if it is established that rent (currency) was part of the consideration, it would be understood to come under the Residential Tenancies Act 2004 (Amended) and consequently the RPZ rules”.

It might be an option to let the property by way of Licence Agreement. Contact IPOA on (01) 827 6000, or your solicitor for more information.

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The Ryan review

C’est plus ca change, c’est plus la meme chose. Ger Deering’s 2018 report reminds us that banks’ bad behaviour, like the poor, will always be with us.

The Financial Ombudsman’s tale-telling made for sober reading. Obstruction, recalcitrance, evasion and downright bullying by some banks (and it is only some), resulted in many rulings which should never have got to Mr Deering’s desk at all.

He published 228 legally binding decisions (from 234 investigations) carried out last year. A total of 107 cases were not upheld and the vast majority (2,300) settled by mediation.

“It is clear from the decisions … that some providers do not always act in the best interest of their customers,” said Mr Deering to absolutely nobody’s surprise. “It is still the case that some providers are not willing to listen to or engage sufficiently with their customers in order to resolve disputes.”

He awarded €90,000 to one couple whose mortgage provider was ‘obstructive’ despite them wanting to engage on an arrears matter. Another got €7,000 after his lender screwed up his credit rating.

It shows that the ‘big stick’ approach is still needed some of the time at least when it comes to lenders.

The FSPO can award up to €500,000 and it deals with pension and insurance complaints also.

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