In my February article, I discussed the importance of minimising vacancy – declining rents, keeping your tenant and, should they leave, swiftly replacing them. That was pre-COVID then and today things are even more dire for landlords. With an expected falling population, lower incomes and many new properties being completed, frankly now owners need tenants much more than they need you.
A driving factor is that rents have declined dramatically, falling more than 10% this year and about 20% down from their peak. It’s now very worthwhile for tenants to move to a better value property.
There are always situations when a tenant must move – life changes and living arrangements will inevitably follow. What’s new, is that now many tenants are moving when they don’t need to – they just want to save money, even if it’s quite disruptive to their life. This is a great danger for all landlords and it means there is a war out there.
Our response is multi-faceted. Firstly, we need to ensure that tenants would prefer to stay. Most do of course, because moving is costly and unsettling. We must respond to repair requests and look to any improvements that deliver benefit to the tenant as well as the property value. Keep them happy and business as usual for good property managers.
Respond quickly and positively to a rent reduction request. We instantly conduct a comparative analysis and suggest a reduction that sits a little above the market, but not too far.
Sometimes, the first we get any inkling of an impending move is a request for a rental reference from another agency. We must pre-empt this change by negotiating a better deal for our tenant persuading them to stay. Sometimes it may look that we are taking the tenants side, but not trusting our advice could be terribly expensive.
Q. What’s worse than a substantial rental reduction?
A. A long vacancy followed by a substantial rental reduction.