So you’ve decided you want to rent out a room in your home but you’re not sure about the legal side of things. While we can’t offer you legal or tax advice, we can offer you a comprehensive guide on best practices from more than a decade of experience working with hosts in Ireland who are renting out their spare rooms.
 
In this blog, we have put together a list of the most common questions we get asked by hosts about the legislation and best practices for renting out a room in Ireland. 

We will cover RTB, Rent Pressure Zone, Short Term Let, Rent-a-Room Relief Scheme, and Social Welfare Payments. We are hoping it will clarify every legal aspect you want to know when it comes to renting out your spare room!
 

What is the RTB?

The RTB is the Rental Tenancy Board in Ireland and it was set up in 2004 to regulate the private rental sector when renting an entire property - therefore it does NOT apply when you rent a room in your own house!

The core responsibility of the RTB is to keep a record of private residential tenancies and to provide a service that resolves any disputes that may arise between landlords and their tenants. 

The RTB also carries out research in the private rental sector and advises the government in relation to policies in the private rental market.


Who Has To Register With The RTB?

Landlords renting out a property to tenants outside of the home they live in are required to register with the RTB.

However, as indicated above, if you are renting out a spare room in your primary residence you do not need to register with the RTB. This means that your rental agreement does not fall under the same guidelines set out by the RTB (such as the need to provide a standard tenancy agreement for example).

If you are considering renting an entire property, you can find more information on the RTB website here.

 

What About A Self-Contained Unit?

A self-contained unit is defined as a unit in a separate dwelling within a larger property that has its own bathroom and cooking facilities. It is commonly called a granny flat when it is located in the garden of the property. Sometimes it can be a converted garage attached to the property.

There is a little subtility here, which is important for you to know:

a) If your self-contained unit is within your house (like a studio with its own kitchenette and bathroom you would have built out in your attic) or if this unit is attached to your property (such as a converted garage), then your self contained unit will not fall under RTB.
You will NOT need to register it with the RTB, as it will fall under exactly the same legislation as if you would be renting out your spare room.

b) However, if your self-contained until is not attached to your property (such as a granny flat located in your garden, 10 meters away from your house for example), then the RTB legislation would apply to it. 
It costs €40 to register your tenancy with the RTB and you can do so here.

If you’re interested in more information on renting out your self-contained unit you are welcome to read our blog post on that here.
 

What Is A Rent Pressure Zone & Does It Apply To Me?

Long answer short: in the case of a spare room being let to a lodger, where the landlord also lives in the property, the Rent Pressure Zone (RPZ) rules do not apply. When you are renting out a room in your own home, you can choose the rent you want to charge but we recommend you stick to the market price or even slightly lower in order to get more booking requests.

If you'd like to read more about best practices when pricing your room you can read this blog post here.

However, if you intend to rent out an entire property that you are not living in, then the RPZ might apply.
A Rent Pressure Zone (RPZ) is a designated area where rents cannot exceed general inflation (or 2% per year when inflation is higher). This applies to new and existing tenancies, with a few exceptions.
 

The RPZs were introduced in 2016 to help address rising rents and provide stability and security for tenants in parts of the country where rents are highest.
The RTB is responsible for creating and maintaining the RPZ which will indicate whether or not a rent increase in your particular area is allowed.    
 

If you are willing to rent out an entire property, you can find more information about RPZ here.  

What Is Considered To Be A Short-Term Let?

This is another topic where there are a lot of subtilities to be understood!

Revenue refers to Short-Term Let as rental periods up to or shorter than 21 days. If, for example, you were to rent out your spare room on Air BnB for a weekend, this would fall under a short-term let. Similarly, if you chose to rent out your spare room to anyone for 21 or less, it would be considered a short-term let. 

Short-term lets do not have to be registered with RTB. However, they might be subject to Registering with the planning authority according to the area you live in. Also, Short Term Let is always subject to tax, irrespective of the area you live in!  

Furthermore, Short-term lets do not qualify for the rent-a-room relief scheme, meaning you would be required to pay tax on any income you earn through renting out on a short-term basis.

This is why at Hosting Power we are great believers in Medium Term Lets, and that’s why our booking periods are set to a minimum of 1 month (and up to 18 months maximum). 

We believe one month is the minimum duration to ensure that our hosts enjoy hosting by avoiding constant guest changes, and it is far more cost-effective too, as your rental income will be free of tax through the Rent a Room Relief Scheme (up to 14000 euros a year). 

For more information on the difference between a short-term let and medium or long-term lets you can read our detailed blog post here. 
 

How Does the Rent-A-Room Relief Scheme Work?

The Rent-A-Room Relief Scheme allows you to rent out a spare room in your primary residence for up to 14,000 a year, tax-free. The scheme was introduced to help ease the housing crises by providing an incentive for homeowners to take in lodgers by allowing them to earn rental income from their primary residence, tax-free. 

To qualify under the rent-a-room relief scheme you must be renting out a room within your primary residence for a period longer than 21 days and you must not earn more than €14,000 from renting out your room/rooms.
 
Under the Rent a Room Relief scheme, homeowners can earn up to €14,000 per year tax-free from renting out a room or rooms in their primary residence. This means that the rental income is exempt from income tax, USC (Universal Social Charge), and PRSI (Pay Related Social Insurance). If the rental income is more than €14,000 per year, the entire amount becomes taxable at the individual's marginal rate of tax.

It's important to note that the Rent-a-Room Relief scheme does not apply to rental properties that are not the homeowner's primary residence.

If you’d like to learn more about the Rent-A-Room Relief scheme and how you can benefit from it you can read our detailed blog post about it here. 


Will The Rental Income from My Spare Room Affect My Social Welfare Payments?

No, the rental income you will get from your spare room will not affect your dole or other state payments. 

If you are getting a weekly social assistance payment, Supplementary Welfare Allowance or Working Family Payment from the Department of Social Protection, you are entitled to get up to €269.23 a week (€14,000 per year) for renting out a room in your own home without it affecting your social welfare payment. 

However, if you receive any other kind of payment from the state, such as Fuel Allowance, it’s always a good idea to contact the relevant government department to find out more information about how renting out a room in your home may affect your individual situation.


In Summary

Renting out a spare room in your primary residence is the least complicated way to earn a rental income. It allows you to earn tax-free and such a rental agreement does not require you to register with the RTB as a landlord. 

Of course, this also means you can’t rely on the services of the RTB to assist you should a dispute arise. 

This is where Hosting Power can help you. We work with hosts who rent out a spare room in their home and who avail of the rent-a-room relief scheme. We provide a range of free services to our hosts, supporting them in renting out their spare room, acting as a mediator in any disputes that may arise, and providing detailed documents (including rental receipts and house rules) to make the rental process easier and more enjoyable too. 

If you are considering becoming a host you can click the button below to apply.