When the economy starts to contract, we all look at ways to save money. For some property investors, reviewing the need for a managing agent might be on their list of cost savings. But COVID-19 has changed the rental market landscape.
These days, managing a property is more than collecting the rent and arranging for repairs. There are times when you will also need to manage some difficult conversations with your tenants. If you already have a property manager, you’ll find you are relying on them more than ever and if you don’t currently have one, you might want to reconsider your decision.
Tenants are losing their jobs or have been asked to take pay cuts. This means, they may not be able to pay their rent – even if they are receiving payments under the Government’s Coronavirus Stimulus Package.
There are 3 ways you can handle this situation:
1. Allow the tenant to break their lease and find a new tenant
With this option you will be facing the challenge of finding a new tenant who is prepared to pay the same rent. Currently, there are almost 7000 properties for lease in the Sydney metro area, so finding a great tenant who is prepared to pay the same amount of rent, could be a challenge.
2. Offer your tenants a rental abatement
A rental abatement provides tenants with a rent-free period on the understanding they will repay the lost rent at the end of the rent-free period. It’s important both the landlord and tenant understand the legal ramifications of a rental abatement. It may not be a good solution for either of you.
3. Reduce the weekly rent for a period of time
In this situation, the tenant continues to pay rent but at a reduced rate. The rent reduction usually has a fixed term (e.g. 3 months). At the end of the rental reduction period, the rent will return to previous levels. In this situation, the landlord permanently loses rental income for the period of the rent reduction. However, regular rental income is still being paid.
What we do
At Stills Properties, we believe in creating long-lasting relationships with both our tenants and landlords. In the current environment, these relationships are more important than ever so this is what we are doing:
1. Checking-in with tenants on a regular basis
Our priority is to make sure every tenant is doing ok. But our commitment to making regular contact gives us an opportunity to check each tenant’s employment situation and their ability to continue paying rent.
2. Investigating rental reduction offers, if appropriate
If a tenant comes to us to ask for a rental reduction or abatement because they have lost their job, we will request appropriate documentation to verify their job loss. Assuming everything checks out, we negotiate between the landlord and tenant to reduce the rent for a fixed period of time.
3. Providing landlords with options
We understand that a loss of rental income could mean financial hardship for our landlords, and let’s face it, landlords can lose their jobs too. There are various tax reductions and mortgage freeze options available and we’ll chat to you about your options.
4. Know the changing legislation
There is no uniform code on rental relief for each state so it’s easy to get confused. As a result, some tenants might ask for leniency that’s only offered in another state. As your managing agent, it’s our job to know all the relevant information for investment properties in NSW. That means, our landlords don’t need to have difficult conversations with their tenants or even spend time looking for the relevant legislation.
While the coronavirus is new, managing properties isn’t!
With over 30 years in the Sydney property management business, we know what it’s like to manage properties in tough times. The cause may vary but our hard work and attention to detail never changes.
Residential property management is always about building strong, open and honest relationships with people. If you feel your current property manager isn’t looking after you or your property the way they should, contact Brigitte Stills on 1300 091 638 or email email@example.com