Another Covid Rent reduction thread

Discussion in 'Property Management' started by Drekko, 14th Nov, 2020.

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  1. Drekko

    Drekko Well-Known Member

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    My tenants have reduced a rent 15% reduction in rent. I feel though, they are just taking advantage of the covid no eviction policy

    Bit history why I feel this way

    When covid started and the new tenant laws got in place. The tenant just stopped paying completely. When asked by the PM, his reasons were " I just thought we didn't have to pay the rent due to "covid"
    When explained, that you need to provide evidence to claim rent relief. He never communicated with the PM and his claim got rejected by VCAT

    Now waiting for a VCAT hearing still which has been almost 6 months in waiting ( apparently there is no date yet, according to my PM)

    Also they sub-letted their friend without my knowledge from the start of the lease from day 1 about a year before covid. I only found this out later. I beleive now this tenant has moved out but I dont have 100% confirmation

    Now they are on a month to month lease due to the VCAT hearing still pending about their arrears
    They've paid some of their arrears back the last few months but still owe about 2 weeks

    Now the latest issue:
    They've asked for a rent reduction of 15%. Due to their dishonesty from the beginning I feel they are just taking advantage of the covid situation and want to save some money. Because landlords cannot evict them until March 21 according to the PM
    I did some reading and they still require to provide evidence. But I did read also some other forums of situations similar to mine and apparently landlords have been told they dont require to provide evidence and the landlords should just give them some rent releif over negotiating over "good faith" which is absurd

    I'm really over the problems and lack of transparency with these tenants and wish them out even if they don't get any rent relief but ill have to wait until March.

    I have asked my PM for them to first provide evidence :
    statements from their employers about any reduced hours, wages, or job loss
    Job seeker + job keeper payments + rent assistance to compare against their financial situation before covid

    My PM has told me its best to negotiate with them at this time due the laws being very very tough for landlords right now. I dont want to just be at their mercy as they can just keep saying whatever they like to pay less or even hardly any rent.
    My PM has told me if I dont come to an agreement it will go to mediation to VCAT or consumer affairs and they tend to lean to the tenants, and if they ask for an even lesser rent fee they will get it

    Not sure what to do here.. I also feel the PM is not supporting me and supporting more the tenants during this situation

    Can I get some advice here on what information to get and what I should I do from here?
     
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  2. SaritsinOz

    SaritsinOz Member

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    Sorry to hear about your tenant issue. I think your PM should be doing way more to assist you after all, you’re paying them a fee to “manage” the property, and there doesn’t appear to be much in the way of “managing” going on!

    Some (not all) tenants can be a cheeky lot; your PM should’ve been on top of any sub-letting. It would appear your tenants are playing a classic game of “let’s see what I can get away with”.

    I’d seriously be considering changing your PM agents. They should’ve explained the process of a rent reduction request to the tenants much earlier - the forms required etc. clearly, and that until all forms are received and assessed, they are obliged to pay the full amount. I hope you resolve this issue soon.
     
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  3. MB18

    MB18 Well-Known Member

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    Cant speak for your area, but where I am a 15% reduction probably wouldn't even match the recent market declines.
    Their reasoning for a reduction might be unjustified, but the reduction itself might be.

    IIRC you can ask for whatever you like but the tenants dont have to provide it to you. A stalemate will ensue until either you meet thier requests, or a mediator becomes involved.

    Your PM probably has a more realistic view of the likley outcome which is why they appear to be favoring the tenants.

    Assess whether a 15% rent reduction is plausible for your area and dont let your personal opinion of the tenants determine the outcome.
     
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  4. Drekko

    Drekko Well-Known Member

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    Given their lack of telling the truth and being honest I clearly doubt their reasoning is valid. Did you read what they said before about not paying rent in my first post?
    Also they kept saying they would catch up with their arrears on X date, kept changing this date further and further along to
    Now the last couple of weeks I have had no rent at all from them. Not one $1

    THey still also have a person living at the property who was never on the lease. They never told anyone about him.

    The vcat hearing date is still pending about the arrears.
     
  5. MB18

    MB18 Well-Known Member

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    The no rent at all is certainly inexcusable.

    I wouldn't get too worked up about them having someone not on the lease living there however.
    There was a lengthy thread here recently and the upshot was that unless they tell you there is someone else also living there, then there is nothing you can do to prove it no matter how obvious it might be.

    I would put my effort into sorting out the rent arrears as that is pretty black and white.

    A 15% rent reduction may or may not be warranted to meet market rates (irrespective of hardship) but its purely academic if they are not paying anything.

    I get the impression your PM is politely telling you there is nothing much you can do right now if they decide to play hard ball, except wait for a mediator. That said, I dont know what the latest is in Vic but I suspect that's close to the mark.
     
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  6. Tom Rivera

    Tom Rivera Property Manager Business Member

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    I dont understand why they continue to refuse to provide evidence to substantiate their request to reduce the rent, and I wouldn't provide them a cent until they do so.

    The property manager is probably right, IF they can make a satisfactory argument they probably will get an even larger reduction, but why haven't they made an effort to make any sort of argument until now?
     
  7. meffn

    meffn Well-Known Member

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    I think I have to agree with MB18 that you have to commercial about it. Firstly, the market is not as strong as it was previously. Secondly, the it's very much the governments intention to shift more negotiating power into tenants, the biggest change being that tenants can't be evicted until march 2021. You just got to play by the new rules.

    If the lease was entered a year before covid then chances are they can find another property 10-15% less elsewhere anyways. If they move to a different rental, you might be stuck with a vacancy for 2-3 months before getting someone in at a reduced rent.

    In the new rules the government says paying rent isn't so important anymore. Maybe they decide to buy a new car before paying rent. So maybe they are 1-2 months in arrears. That is their discretion. And you cant evict them, though if you're luck you can evict them in march and go through the debt collection process. So again, maybe you might encourage them to pay rent on time by ensuring your rental is at market. The carrot before the stick.

    You seem a bit stuck on the fact that the tenant isn't transparent. But the fact is that the market situation has changed not the tenant's situation. There is nothing more the tenant has to tell you. And if they did, you might be looking at offering more relief.

    As an investor you just have to hope that there are more good days than bad ones.
     
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  8. skater

    skater Well-Known Member

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    So far all the advice you've got is from people that don't know anything about the market in the area your IP is located. Mainly Sydney investors who just suppose that the whole of the Melbourne market is in the same situation. Advice given would, and should differ substantially based on the location.

    My advice is to speak to a good PM who knows the market. Calling @Lil Skater

    Full disclosure, yes, she is my daughter BUT she is also a gunn PM, based in Melbourne, who can give you good advice that is actually relevant to your situation, and not assumptions.
     
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  9. AlphabetSoup

    AlphabetSoup Active Member

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    I don't know what suburb OP's property is in, but I know of several properties that have been vacant for 3-4 months. I know of landlords that have lost over $10,000 in lost rent due to having a vacancy during lockdown. Vacancies in inner suburban properties that pre-covid, would have had plenty of interest. I am in Melbourne and familiar with the market in some areas, but you really need the advice of someone who knows your particular market. There is plenty of excess stock in Melbourne at the moment - particularly smaller properties. Proceed with caution.

    I personally think a 15% reduction is very reasonable given the current market. I think subletting is not a huge deal either - particularly if it is only one other person and it helps the rent get paid. Subletting to multiple people (where the tenant makes a profit) is what you want to avoid. Oh, and those tenants who lie about having pets... there are plenty of those in Melbourne.. can't stand tenants that do this.
     
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  10. pwnitat0r

    pwnitat0r Well-Known Member

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    PropertyChat at it’s best... all friends and families recommending one another
     
  11. Tom Rivera

    Tom Rivera Property Manager Business Member

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    I can recommend @Lil Skater, she has an excellent reputation- I've never heard a bad word from clients and industry associates alike.
     
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  12. Susanna Laurens

    Susanna Laurens New Member

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    It is hard to be a landlord when the tenant is not transparent . We have a tenant who has requested a rent reduction - he has many many thousands of dollars in shares and as the return has decreased at present , he wants a rental reduction despite having been in a full pension ( don’t know how you are eligible for a full pension whilst in receipt of approx $1000 in dividends each month?) and he has $9000 in the bank . Doesn’t want to sell any shares as that would see him loose some of his retirement investment, yet I am expected to reduce the rent and take a hit on my retirement income ? Go figure
     
  13. Tom Rivera

    Tom Rivera Property Manager Business Member

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    That's ludicrous! Are you expected to subsidize him every time she share market performs poorly, or what if he just made a poor purchase decision? Imagine if he'd bought shares in Blockbuster!

    Also, I was under the impression the share market on a whole is doing perfectly well right now?
     
  14. Joynz

    Joynz Well-Known Member

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    I’m in Melbourne too - south eastern suburbs - and did not need to reduce the rent of my (very ordinary) house when it rented in August - mid covid-19 lock down.
     
  15. balwoges

    balwoges Well-Known Member

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    I cant believe how uninformed you are :eek: my dividend payments are 1/4 of what they were last year despite the recovery of some share prices ...
     
  16. Susanna Laurens

    Susanna Laurens New Member

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    An update , I have spoken this morning to DHHS and Consumer Affairs and both advise that this tenant is well able to apply for the rent relief due to the supposed negative financial impact on him , even though his shares afforded him $1000 per fortnight in income on top of the pension . It is so disappointing that there seems to be no way that a landlord can oppose this , except by formally fighting it in a more legal context , but as I was told today , the tenant has rights !
     
  17. Phoenix Pete

    Phoenix Pete Well-Known Member

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    So according to Vic DHHS and Consumer Affairs, the tenant in this case can claim rent reduction because his shares dividends have been reduced....

    I wonder... if the share dividends drastically improve beyond their pre-covid rates of return.... would the tenant be happy to accept a rent increase from the owner? Hmmmmmmmm !!!
     
  18. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    The investor has an option - sell the shares and pay your rent !!. Was this argued ? Investment income is their choice. Even super minimumpensions are halved - Does that mean they must choose half ? No.
     
  19. Tom Rivera

    Tom Rivera Property Manager Business Member

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    I guess I must be terribly uninformed on share dividends, aren't you lucky I'm not a stockbroker. Thanks for clarifying.

    Bugger, that looks like it's the right answer.