You might be forced to rent one of your spare rooms to be able to afford the mortgage or you might use it to build your financial advantage. Renting a room in Ireland can be a fantastic opportunity to drastically improve your finances, because it offsets your housing costs and provides great tax benefits due to rent a room relief. If you are still on the fence about doing this, you might read more about the benefits of this approach in my previous post. Anyway, how do you get this actually done? It is not very hard, but it takes some work to get it done properly and I hope you will find those tips helpful!
I break the process into the following steps:
1. Getting the room ready
3. Viewings and tenant screening
4. Contracts and other documents
Getting the room ready
You should first start with emptying the room from things that don't belong there and making any necessary repairs, such as painting.
Then you should think about what will be required in the room, e.g. does it need additional storage, chair and a desk? IKEA has a great range of chairs, desks and storage. I recommend making sure that the room has at least a small wardrobe and a chest of drawers.
Mattress protectors greatly extend the life of the mattress by protecting it from staining. Replacing a protector is much cheaper than replacing a mattress.
Does it make sense to put much effort into decoration? The room should be tidy and should have all the necessary furniture. From what I've seen on the Irish market, the standard is one picture per room. On top of it for the staging you could use some nice bed sheets with an accent throw and pillow and potentially some plants or a bouquet of flowers.
When it comes to taking photos, remember about the basics:
- make sure that the room has good lightning: open the curtains, turn on the lights.
- take photos horizontally, make sure that the ground is leveled and the photos don't look crooked or blurry.
Advertising the room and finding the tenant
Unless you advertise a room for rent, nothing will happen. Before you start advertising though, you should figure out how much you would like to rent the room for. The current limit for the rent under the rent-a-room-room-relief is 14000 euro per year, which corresponds to 1166 euro per month. Obviously if the rooms in your area rent for 600 euro per month, you shouldn't ask for 1000 euro. You should base your price on similar offers and make potential adjustments based on the standard of your accommodation. If there are any restrictions on the building, e.g. no pets policy, you should include it in your advertisement.
When it comes to where to advertise, you can start with telling your friends and coworkers. If you work in a big company that has a lot of regular new company hires, advertise on your company channels.
I would also recommend using an advertisement service:
If you are using multiple ways of advertising, it might be a good idea to collect info using a google form, instead of giving out your phone number and waiting for phone calls. Also these days, many young people have an aversion towards calling on the phone. Here is an example of a form you can use to collect all your data in one place.
Viewings and tenant screening
Assuming that you had some good luck with the advertisements the next stage of the process will be arranging the viewings. You could either arrange viewings individually or batch them, by having multiple prospective tenants to show at the same time. Individual viewings will help you to assess if the person is a good match, because it will be easier to talk to them and it should also make the prospective tenant more comfortable. However, the batch viewings can be more time efficient.
You shouldn't accept the first person that is interested in renting a room. You should screen them and then in case you have multiple candidates, pick the ones according to some specific criteria (e.g. the one with no red flags and highest salary). Here are some good tips about tenant screening from a property management company and here is a guide of the Irish Property Owner Association.
Use the tips above and collect the necessary documents, such as:
- references from previous landlords
- employment verification (e.g. salary letter)
- ID photocopy
One thing that I recently learned about is that you can look up if a given person had tenancy related disputes in the past, for example due to bad behavior or not paying rent. You can find the dispute search here.
Contracts and other documents
Renting a room (which isn't a self contained unit) doesn't fall under the regulation of RTB and is generally much less regulated. See the citizen information articles about the landlord and tenant sides of it. The contract in such a case is not called a tenancy agreement, but a license agreement or a lodger agreement and the tenant is called a licensee or a lodger. It is the best practice to have a written contract, otherwise it might be hard to resolve disagreements. Having a written document is beneficial for both the tenant and the landlord, because it provides clarity about the rules of the agreement. For example in the contract you can have clauses about all sorts of rules, such as:
- no smoking
- tidiness and noise
- expectations towards guests
- how the agreement can end
- how and when you will be paid
and so on.
So where to start when it comes to writing the contract? Here is the contract template I use (I am not a lawyer though). Another personal finance website: frugal personal finance also provides a free template.
You can also buy a professionally written contract reviewed by a lawyer like here.
It is fairly common to attach a property inventory document to your contract. In such documents you would outline what items are in the room and in what state. You can even attach pictures. This will be useful when the tenancy ends and when you assess the state of the room. For example if things are missing or damaged, you might want to deduct the replacement cost from the deposit. Without a property inventory document it's hard to prove in case of the dispute. Here are some examples and some tips about this topic.
One more thing that I recommend adding is a 'House Info' document that presents:
- contact information, exact address and postal code
- WiFi information
- access information (how to open the gate, garage, access the mailbox, use the security system etc)
- appliances information (how to turn on the washing machine or dishwasher).
This can save you time in the future by providing a nice reference for the tenant. You can make it once and share it through google doc, so it's easily accessible to your tenant.
Getting your room rented can be quite a lot of work, but it can be done. I hope you find those tips helpful and will send you time and trouble. If you have some suggestions, please share them in the comments.