What about small time landlords?

With less than 1 per cent of tenancies resulting in formal complaints, why are landlords seen as the ‘bad guys’?

When it comes to landlords, the most common assumption is that if he/she is a small-time landlord, he/she will not do a good job of managing a property.

The Residential Tenancies Board (RTB) doesn’t provide statistics on ‘landlord size’. So, we can only assume that those dealing with fewer tenants are usually more culpable, although recent headlines about some landlords – with upwards of 60 people in a single house – might suggest that ‘bad’ landlords come in all shapes and sizes.

Currently, there are about 325,000 tenancies registered, representing 175,000 landlords and upwards of 700,000 registered occupants. No matter the industry, this will mean there are some disputes. The most recent data I could find was the RTB’s annual report from 2014.

In it, less than 1 per cent of tenancies (6,071) result in formal complaints. Of these, 3,374 went to mediation and 447 were appealed to tribunal. The single biggest issue was rent arrears and over-holding, which was 34 per cent of cases. These are both typically issues on the tenant side.

The second biggest issue was landlord-oriented and involved invalid notices of termination, at 25 per cent of complaints.

That there is so much non-compliance is still a problem. There were almost 20,000 notices sent out to remind landlords of their requirements, but this bled down to just 21 district court proceedings.

The third issue is that of deposit retention and it accounted for 23 per cent of cases. In 29 per cent of them, it was partially refunded; in 33 per cent, it was validly retained; and in 38 per cent of the cases, it was fully refunded. So, 62 per cent of cases do not result in a landlord being entirely in the wrong.

So, what are some things we could do to help professionalise the sector? For a start, a reminder to take out contents insurance would be a good idea; half of tenants have none. Another would be for landlords to lay off the arrears risk.

For about 2 per cent of your annual rent, a service such as RentAssured.ie will give you a hedge against tenant default. Not only that, it will include a tenant credit check as part of the process in conjunction with Stubbs Gazette. This means that it will pay up to 11 of 12 months of rent if you satisfy its terms and conditions.

With so many landlords claiming they can’t make ends meet, it only takes a single rent arrear from a tenant in many cases and they fall behind on their mortgage.

This can lead to a downward spiral of issues, from failing to remain tax compliant to involving rent receivers. If a small fee could reduce this issue, it is worth considering.

Added to this, the service offers legal guidance through the process so you have a professional collections and credit reporting firm guiding you along at the same time as there being a fund you can claim against for legal costs as well as malicious damage (up to one month’s rent) cover.

Professionals hedge risk. Part of how you do that is to look for things such as tenant references, but a search that goes deeper and looks at things, such as RTB findings and registered judgements, is a better and deeper process.

Lastly, as an insurance and a cost directly related to the provision of the business, it is deductible against profits (the income from a claim is not).

Landlords need to get parity of treatment in taxation. This has been avoided since 2009. Recently, the findings in the High Court that the Non-Principle Primary Residence Charge was tax deductible may lead to a case on Local Property Tax being the same, which would be a positive development.

Being able to off-set full mortgage interest is also vital. This unfair treatment must end. You can’t demand professionalism while treating the sector to a slap-stick taxation environment, these are incompatible objectives.

The RTB has done such a good job of raising its prices that perhaps it could incorporate some landlord CPD hours (even if done online) for landlords in return for lower registration fees. The more educated landlords are on processes, the less likely they are to withhold deposits unfairly or break rules.

There is also scope for preferential tax treatment in return for rent-control. Why on one hand do we punish a sector with rent control but then keep the rest of the broken system? Is quid pro quo becoming a forgotten concept in our housing mess?

The majority of landlords are, and will be for some time, small-time, accidental or reluctant landlords. Landlords are soft targets. It’s time the role of “mom n’ pop” landlords is seen not as a barrier to progress, but as a key stakeholder in a wider housing environment and accepted as stakeholders worthy of tax treatment as fair as their direct competitors get.

Karl Deeter is compliance manager at mortgagebrokers.ie. Follow him on Twitter: @karldeeter

This article first appeared in the Sunday Business Post on the 19th of February 2017.

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