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Why You Need to Raise the Rent

Many landlords believe that they cannot reject any applicant for any reason, that they have to accept the first one to come along with the money or risk the grief of a lawsuit or Fair Housing complaint. Not so. There are numerous legitimate, businesslike reasons to reject a prospective tenant because of past or present behavior.

1. Unsatisfactory references from landlords, employers and / or personal references. These could include reports of repeated disturbance of their neighbors' peaceful enjoyment of their homes; reports of drug dealing / taking or drug manufacturing; damage to the property beyond normal wear and tear; reports of violence or threats to landlords or neighbors; allowing people not listed on the lease or rental agreement to live in the property; failure to give proper notice when vacating the property; or a landlord who would not rent to them again.

2. Evictions.

3. Frequent moves. You have to decide what constitutes frequent moves and apply the same criteria to every applicant.

4. Bad credit report. If a report shows they are not current with any bill, have been turned over to a collection agency, have been sued for a debt, or have a judgment for a debt, that is grounds to reject. These do not have to be debts connected in any way with housing.

5. Too short a time on the job. As with frequent moves, you have to decide what too short a time is and apply the same criteria to every applicant.

6. Too new to the area. There is nothing to say you have to rent to people who have just moved to town. Be careful, though, many times these would be excellent tenants and the time and long distance call expense of checking them out could pay big dividends.

7. No verifiable source of income.

8. Too many vehicles. Lots of cars can be a real source of irritation to neighbors and make the entire neighborhood look bad. Chances are, if they have more than one vehicle for every adult they spend a lot of time broken and being fixed. That means they could be in pieces in the front yard.

9. Too many people for the property. Be extremely careful with this.

10. Drug users.

11. Pets.

12. Any evidence of illegal activity. You must be able to come up with some kind of satisfactory evidence. I don't know what that would be, every case would be different. Certainly a letter from the local Garda station warning a previous landlord of their illegal activity and threatening to close the property is considered sufficient evidence.

13. History of late rental payments.

14. Insufficient income. You must set up objective criteria applied equally to each applicant. Insufficient income could reasonably be if the scheduled rent exceeded 35% of their gross monthly income. For example, if the rent is €600, their gross monthly income must be at least €1714.29. The formula is:
Acceptable income = scheduled rent
income ratio

15. Too many debts. Even if their gross income is sufficient, they may have so many other debts that they would be hard pressed to make all the payments. A rule of thumb might be that all contracted debts, including rent, cannot exceed 50% of their gross income. Contracted debts would be such things as credit card payments, car payments, loans, etc. Those would not be cable TV, water and garbage, telephone, or other utilities.

16. Conviction of a crime which was a threat to property in the past five years. Included in this could be drunk driving convictions, burglary convictions, robbery convictions, and other such misbehaviors.

Laws change constantly, and what you don't know can and will hurt you.

Robert Cain, publisher of the Rental Property Reporter, has been providing solutions for the rental property industry for seventeen years. He is author of the landlord manuals Profitable Tenant Selection, Can Section 8 Work for You?, Using the Gross Monthly Rent Multiplier, the tape series “Avoiding the Tenant from Hell,” and several other booklets and manuals for landlords and property managers. In addition, he writes and produces newsletters for other companies that serve the rental property industry. He is a highly sought-after speaker, seminar leader and consultant on property management and real estate topics.

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