Short Term Leasing
This arrangement may only be entered into with a local authority. It will suit property owners who want to retain landlord responsibilities or want to enter into shorter-term arrangements.
Under the Rental Accommodation Scheme (RAS) and the Leasing Initiative, availability arrangements can be entered into between local authorities and property owners.
There are two common contract types.
The most common is the availability type arrangement under which property owners will:
- Receive guaranteed rental income from the local authority monthly or quarterly.
- Receive rent payments for vacancy periods.
- Have no rent collection or rent arrears obligations.
- Not incur advertising or administrative overheads.
- Be required to register tenancies with the Private Residential Tenancies Board (PRTB).
The main differences between this and a longer term leasing contract (Option 1) are that the owner will:
- Retain responsibility for day-to-day property maintenance.
- Be the landlord to tenants nominated by the local authority.
- Register tenancies with the Private Residential Tenancies Board (PRTB).
- The other form of contract is a tenancy-by-tenancy arrangement where an agreement remains in place for a specific tenant and ceases once that tenant moves out. Payments are not made for vacancy periods under this arrangement. The property owner may offer the property to the local authority at the end of the initial agreement for a further term.
Owners will receive a rent amount of approximately 92% of the current market rent. The rent discount may vary in this arrangement and rents will be agreed through negotiation with the local authority.
The rent discount is applied to take account of the fact that the property owner is paid for vacant unoccupied periods, rent is paid in advance and the normal landlord tasks associated with filling voids are eliminated.
Rent reviews will take place every two years.
Where the availability type arrangement is used, owners will sign an ‘availability agreement’ with the local authority. Under the terms of this agreement, the owner agrees to make the property available for a specific period for nominees of the local authority and to maintain the property in a lettable condition.
Main Terms of the Arrangement
- The key landlord and tenant (and tenancy agreement) will be between the property owner and the nominated tenant.
- The owner will retain responsibility for:
- Insurance of the property, landlord contents and public liability.
- Payment of the management company service charge; (if any) and other changes such as the Non Principal Private Residence (NPPR) charge and the Household Charge.
- Dealing with breaches of the tenant’s obligations to the landlord, should they arise.
- The local authority will nominate tenants when vacancies arise.
- Owners will receive a rent of approximately 92% of the current market rent.
- Payments will usually be made Quarterly.
- Upward and downward rent reviews will apply periodically.