The Institute of Professional Auctioneers and Valuers (IPAV) has cautioned landlords and investors about signing licence agreements with tenants as a way round the need to register with the Private Residential Tenancies Board. Such agreements exclude tenants from the benefits of the Residential Tenancies Act, 2004.

Under law all tenancies must be registered with the PRTB at a cost of €70 per tenancy, payable by the landlord. Landlords who fail to register a tenancy cannot claim mortgage interest relief on borrowings.

However, it has emerged that some landlords are using licence agreements with tenants as a way round the need to register with the Board.

Fintan McNamara, IPAV Chief Executive said many of these licences may be deemed not to bone fide or be found to be invalid and could result in financial penalties down the line for landlords.

“A licence must mean that the tenant dos not enjoy exclusive rights to the property,” he said. “It would mean that the landlord would have to have regular access, pay the utility bills and so on such as happens in an aparthotel. It is very difficult to see how such an arrangement could operate with a regular flat or house let out to tenants.”

Mr McNamara said that although over 90,000 landlords have registered with the PRTB, there is a significant number who have still failed to sign up.

“The courts have in the past been wary of licences and require proof other than a written document that the licence arrangement was genuine and not a device to deprive tenants of their rights,” he said. “There is every possibility that the Revenue Commissioners may view the instrument with equal suspicion when interest relief is claimed.”

Further problems can arise if the relationship with a tenant turns sour and this could have the effect of greatly lengthening the process of terminating a tenancy, Mr McNamara warned.

Ends.