The Rent-a-Room Scheme is one of the best tax incentives available to Irish people, allowing you to earn up to €14,000 a year completely tax-free by simply renting out rooms in your home. Find out more about the specific rules for eligibility for the scheme here.
There is no legal or regulatory requirement for you to create a contract between you and your tenant in a Rent-a-Room situation. But this does not mean that you shouldn’t, there are many benefits of creating a contract such as clarity of ground rules, handling disputes, length of the rental period, etc.
From the renter’s perspective, they have far fewer rights when compared to signing a lease for a whole property.
You do not have a standard tenancy agreement. Instead, you have a licensee agreement with your landlord. This means that you are in the property by the landlord’s consent or invitation. As a result, you cannot avail of the type of protection that tenants are entitled to under the residential tenancies legislation.www.citizensinformation.ie
This means that the landlord is not obliged to give you a Rent Book or even a minimum notice period to end the tenancy.
Even though this is the case, many homeowners will choose to draw up some sort of agreement between them and the tenant.
Here are some of the benefits of doing so:
Benefits of creating a contract for a Rent-a-Room tenancy
Laying down ground rule
One of the most obvious benefits of creating a contract for a Rent-a-Room tenancy is that you can set the initial ground rules of how you want the agreement to operate.
Here is a non-exhaustive set of rules and expectations that can be created through an agreement:
- How the rent will be paid – cash, direct debit, etc?
- How often reviews or increases in the price of the rent will happen
- How long the tenancy agreement will last
- How much notice will be given if the landlord wants to take back the room
- How bill such as electricity, gas and internet will be split
- Rules surrounding parties and smoking in the property
- How much the deposit will be and the situations which can result in the tenant foregoing their deposit
Let’s be honest, it is very common for disputes to arise when you are living with someone. If you take a laissez faire approach when renting out a room and have no contract or agreement in place then when a disputes inevitably arise you will have nothing to help guide its resolution.
In an argument, the last thing you want to be relying on is “he says vs she says”.
If a dispute arises and one party wants to go against one of the agreed terms of the Rent-a-Room agreement, they the other party will always have the option of trying to bring them to the Small Claims Court which deal with claims of up to €2,000.
Benefits for the tenant
From the tenant’s perspective, they may also appreciate having the certainty of a contract and the clarity it will bring. Finding a place to rent can be quite difficult in the current market and it is good to have agreed on some minimum notice period with the landlord.
Even if the landlord is not legally obliged to give you a notice period, if there has been an agreement made, they will be far more likely to abide by it.
There are different levels of professionalism you can apply when deciding how to draft the agreement between you and the tenant, from the rubber-stamped legal version to the back of a matchbox.
The document does not need to be a formal contract created by a solicitor, but you could use a solicitor to help you draft it, but this will set you back a few quid. Even a simple document with all the terms signed by both parties could be enough to give you comfort.
Disclaimer: This blog should not be construed as legal advice and you should talk to your solicitor about your own rental situation.