What’s been the effect of Covid-19 on residential rentals?

Beginning in March, we were inundated with calls from worried tenants requesting we speak to their landlord about their request for a significant rental reduction. A good agent knows that they must not be just a conduit to the landlord by presenting them a problem without a solution.  How could the landlord respond when there is the certainty that the response would be either too generous or too stingy?

Firstly, we advised everyone not to panic. The Federal Government had come out with a directive that tenants could not be evicted because of non-payment of rent due to the virus. Our message to tenants was to first focus on the urgent things – family, health, sorting out access to Government benefits and finding work opportunities. Additionally, to pay as much rent as they could afford while we would all wait to see what the Government would further announce.

The NSW Government did release a policy in May that gave us rules to work by. Tenants who had experienced a household income reduction in excess of 25% were entitled to require the landlord to enter into good-faith negotiations about a rental reduction plan. For less affected tenants there was no guideline or requirement.

We quickly realised that it’s definitely not a good time to lose a tenant. Rents have fallen by 10% to 15% over the past year and vacancy time has increased markedly.  When a tenant says they are having difficulty, we believe it makes good sense to offer a rent reduction of about 10%.

These measures have seen most of our owners and tenants come through the process in a relatively good state on the whole. It’s taken many conversations and lots of innovative thinking to come up with a good set of practices that are guiding us through this difficult time. We’ve also received calls from self-managing landlords who have found their situation to be very difficult and we are more than happy to provide suggestions and assistance on all property matters.