My view today is that we shouldn’t be making swift decisions about rent reductions based off emotion. Unfortunately for a lot of tenants they have got more important things to sort out in the next week or so.
Certainly the loss or reduction of their employment for an employee, or a similar financial blow for a self-employed person is a hugely stressful position for a everyone, especially a tenant who is bound to a lease agreement. One of their first worries is their security of tenure.
They will worry to varying degrees about:
- Being evicted
- Not having money for other essentials
- Getting a bad tenancy record
- Building up a huge debt
- Doing the wrong thing by the owner
None of these things are going to happen instantly and the first will be certainly banned by the Government soon. We are in no position and neither is the owner of the property to know what is the best outcome at this moment. Sadly, there will even be the probability that people will see this as an opportunity to get a rent reduction when they are not currently being affected, or expect more than they need or deserve.
We know the Government will provide some assistance to tenants and perhaps landlords and they will also set some rules. We were expecting this to be announced on Tuesday, but I’m not surprised that it wasn’t easy to come up with solutions for such an immensely complex set of factors. It will come soon.
There will winners and losers for both sides. Most will be winners with employed tenants continuing to pay full rent, while the landlord receives a lower interest on the loan, and optional deferral of repayments as well. The biggest losers will have a tenant who loses their job, gives a big discount on their rent, doesn’t have landlord Insurance, doesn’t have borrowings and their main source of income is the rent.
In the meantime, we will encouraging tenants to firstly not worry about eviction, but to focus on getting their Centrelink arrangements sorted, work out their budgets with paying rent as a priority, then come back to us with evidence of their new situation and a plan for paying rent. We can then speak to our owners and work towards a fair arrangement. Of course, this will depend on their landlords own circumstances and basic character. Their final decision is what we must carry out.
I hope this helps. I also hope you find some merit in it. However, I may be missing something significant and I welcome your views on any part of it. I may have got it fairly wrong.
I think this will be the hardest part of property management for the next few months. I know my team will look after each other and work to achieve optimal outcomes. Sometimes it might end up with an outcome that divorce lawyers usually seek to achieve – “both parties are equally unhappy”. We will have to live with those situations as well. There will be some heart-warming examples of generosity too.
Many thanks for reading and I wish you all to stay safe and optimistic in these uncertain times.