I am an overseas landlord of one property in Ireland which is/was my main residence for 10 years before moving abroad, within the EU, for work, and it will be my main residence once I return.
For the last eight years, I have rented the property (apartment) out through the services on a managing agent on a renewable one-year lease (to same tenant for last six years).
However, given the incoming law changes whereby I must provide a six-year lease, I am reconsidering whether it is worth continuing to rent out the apartment given that I intend to return to Ireland within the next 18 to 24 months.
I don’t wish to run into problems where I could move back to Ireland and have no home to return to if the tenant is on a six-year lease and refuses to leave, citing no alternative is available.
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What are the implications if I do not renew the lease with my current tenant when it expires this summer (thereby six-year lease commencing summer 2026 to 2032) and instead rent the apartment out to a family member at a lower than market price, as they could not afford the market rates?
I understand I would still have to pay income tax but would my immediate relative have to pay CGT on the annual difference of the market rent vs the rent I would charge, for example €1,600 a month vs €800 a month?
AW
The new rent rules are giving a lot of homeowners pause for thought. And it is not just “professional landlords”, a much maligned group these days.
Thousands of people are in the same position as you: they own a family home in Ireland but are working abroad. They expect to return and wonder what the new rules will mean for them.
The first thing to say about the new rules is that they are designed to bring more certainty to the sector, especially for tenants. They now have greater security of tenure and greater certainty about what can and cannot be done on rents without having to wonder whether they are inside or outside a rent pressure zone.
For landlords, there is also the ability to reset rents to market levels between tenancies which was one of the big bugbears for the sector thus far.
The important thing to understand about the rules is that they distinguish quite clearly between what are termed big landlords and small landlords. Anyone like you with three or fewer properties comes into the latter grouping.
And this is important, because smaller landlords have more wriggle room when it comes to ending tenancies – both during the six-year “tenancy of minimum duration” as it is called and at its end.
While large landlords can only force tenants out if they breach the terms of their contract or the property is clearly no longer suitable for the tenant’s needs, smaller tenants like yourself can also serve notice if they need to sell the property due to financial hardship, or to avoid hardship. Critically for you, they can also ask the tenant to leave if they or a close family member needs to live there.
The rules on what is a close family member have been tightened but, from your point of view, the good news is that there is nothing in them that prevents you giving the tenant notice when you realise you are coming home.
However, you will need to make sure your notice is given in the form laid down in the Act and be aware of the notice periods required.
Notice periods run from 90 days to 224 days, depending on how long the tenant has been living in the property. The 90 days is only within the first six months: it rises to 152 days after that in Year 1. Between one and seven years, you need to give 180 days’ notice – effectively six months.
That rises to 196 days in year eight and 224 days for anyone who has been in situ for more than eight years.
Clearly, in your case with this tenant the notice period required is going to be at the upper end so you will need to be able to plan your return home some time ahead.
As your current lease is established under the old rules, you could end it this year and, to avoid the place being empty, accommodate your family member at a rent below the market level. The family member won’t have capital gains tax but the difference between what they are paying and the market rent would be seen as a gift under capital acquisitions tax (CAT).
That will limit what they can subsequently inherit but, more importantly, it seems to be overthinking the whole thing.
There is nothing in the new rules to stop you moving back into your apartment on your return, provided you have given notice in the proper form.
Meanwhile you have a tenant, who, one must assume, has been broadly hassle-free. It seems to make most sense to continue with the status quo.
If you are talking about overstaying, where a tenant refuses to leave, often because they cannot find other suitable accommodation, that could be an issue either way – at the end of the current lease, or when you return.
There is nothing to stop you, if you wish, letting this tenant know on renewal under the new rules that you are likely to be returning during its term, giving them time to look at alternatives.
Their leaving voluntarily when they find a new place is also allowed under the new rules. And if that does create a gap, well, you can still consider the family member as a stop gap.
There is much changing under the new rules but you have nothing to fear from them.
Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or by email to dominic.coyle@irishtimes.com with a contact phone number. This column is a reader service and is not intended to replace professional advice
