Landlords, buy-to-let investors and agents who have sought to avoid paying a €70 tenancy registration charge by resorting to licensing arrangements may soon discover that their efforts are futile.

IPAV Chief Executive Fintan McNamara today warned that these licence agreements are fraught with pitfalls and drawbacks and may not be worth the paper they are written on.

“By using a licence instead of a normal registration, both investors and agents alike risk placing themselves unwittingly at the mercy of capricious and unscrupulous tenants,” he said. “One recent adjudication by the Private Residential Tenancies Board (PRTB) rubbished one such licence when it was presented and thereby set a standard for many more which are likely be disputed in the future.

In the particular case, the landlord had claimed that because the occupants of his apartment were residing under a licence agreement, the PRTB had no jurisdiction to hear and determine a dispute. However, after an investigation, the PRTB took the firm view that the agreement was for a tenancy and not a licence and, furthermore, that the tenancy was subject to the provisions of the Residential Tenancies Act, 2004.

“It is likely that any such licence agreements which surface in future, will be subjected to the same scrutiny,” said Mr McNamara. “Moreover, the Act is to be significantly amended in the coming months to close some loopholes.”

Registration of tenancies with the PRTB is now a prerequisite for investors claiming tax
deductibility on interest payments on loans which they have taken out to purchase and repair residential investment property. Where investors opt for a licence arrangement and this instrument is found to be invalid, they may well fall foul of the Revenue.

Furthermore, the procedure of regaining possession of a property from troublesome tenants is likely to be far more lengthy and costly even where a genuine licence agreement exists.

“In short, this device is hardly worth the trouble except in very rare circumstances,” Mr McNamara advised.

Ends.