How has COVID-19 affected you as a landlord?

Thanks @Y-man I got over my meltdown the next day. So much has changed since then. I still haven’t got any insight from my Property Manager but I’m not going to get stressed over it.

 

Anyone who thinks they are evicting at the moment (unless it is due to complete mistreatment of a property) is not with it right now.

What are you talking about? Market dynamics changed overnight and people are now behaving within the free market accordingly. That isn't a mess that someone else made for you. It is just a function of the sudden change to the market. What are you going to say? "I don't like you because you retained a tenant in a downturn at my cost". Want to win? Offer a better deal. Your deal was no longer competitive and market realistic.

This. I have seen so many posts here where people are hoping that they only have to temporarily lower rent, or will be able to claim back all the arrears... That ship sailed. This is an entire reset of the economy we are in. The idea of keeping 100% status quo is done. There will have to be some give and take from all affected. I'd argue that if a lot of landlords could maintain a stable tenant and 75-80% of income going forward, then they are doing very well. Property prices and rental rates will drop.

This is why you are seeing agents for people leaving dropping their pants to keep existing tenants there. 60% of the current rate is better than 100% of nothing. It is almost humorous to see the angry property managers here whinging that they lost a tenant because their existing agent suddenly offered a better deal and to pay whatever they lost in a deposit. This is the norm for the next 12-24 months.

 

I think that has been or might be increasing to $79k.

 

Do you think this is for all of Australia (and other non-socialist countries) or are you only referring to overpriced rentals in Sydney and Melbourne where demand has been so high recently?

Also what do you consider to be a fair rent to charge for people who live in various styles of homes, for example a family home in a leafy suburb close to popular schools, or a 2 bedroom unit easy access to public transport.

 

For me, I have voluntarily offered $20 pw reduction from $470 to $450 in mid March to our existing tenant which the agreement will expire by early June, as long as they sign a new 12 month lease. They have just signed it a few days ago and they were appreciative of us cutting rent.

No changes on my other IPs, one is on periodic lease and one in existing agreement that is not expiring until September, hopefully things will get better by then.

I am also doing refinancing now given the low interest rates as well as resetting my 30 year loan period, even if I have to pay breakfees for my existing loans, the banks are making really good cash offers for refinancing.

 

It doesn't actually matter what I think a fair price is for an x bedroom house... 1 million people just lost their jobs, it doesn't matter where you are, this will hit everyone and the market rates will need to adjust accordingly. That means wherever you are, whatever the current market rate is, will drop.

Melb/Syd will just likely be hit harder (double whammy actually - because the change in work practices will make the need to live close to CBD less valuable slightly - and I live close to cbd).

At the moment, forget the normal valuation of property - there is reduced economic activity which well over arches any of the traditional value based propositions (schools, leafy suburbs etc).

One thing though... geez I am happy we aren't in the US right now.

 

Amen

 

My PM phoned me after checking on tenants work situations. A couple’s job stability is ok for now but may change. I figured I would be open to a rent reduction if ‘ push came to shove’. The tenants keep the property in good order. I did some research on the Centrelink payments they would be entitled to, if their jobs disappear. All up with the dole plus Virus allowance and rental per fortnight x two people. They could jointly receive $3000 per fortnight. More than I receive from their rent of $600 per fortnight. I emailed the PM and explained this. So I couldn’t afford to give them a rental reduction. I have two properties Which are my income. I have spent good money on both properties and always carry out repairs. Hopefully the rents will continue to be paid. If not I will be looking for compensation. I live modestly on these rents.

 

One of our IP's became vacant earlier this week - we dropped the rent by nearly 40% in the hope of attracting a new tenant, but not holding our breath.

No mortgage on this property, so it's not the end of the world, and tempted to leave it vacant as - if they move in and then decide not to pay - well bugger me

 

well done on doing your own research. If a tenant is eligible for each of the government payments listed above after loosing a job, they should be able to keep paying rent.

 

What location? That’s a massive reduction.

 

Hi Lizzie yea well better to leave it vacant. Than have non payers once they move in. At least you can claim as a tax reduction hopefully. I also do not have a mortgage. The tenants have a lease until 2021 though. If your property is empty are you close enough to keep an eye on it. Check your insurance though on a empty house they only cover for 60 days. Change it to ‘ holiday house’ insurance , put some stuff in there and maybe stay overnight once a week. Ive done it.

 

Just be aware that there are many currently on welfare payments that are paying above $300pw, so it's easily do'able. Tenants just sometimes have to adjust to their new reality.

 

Not sure who's dodgier the tenent or the landlord
If a property is not genuinely available for rent its not allowed to be claimed during that period .
I thought can only claim for the period that it was generally available for rent as a % , or did I miss something.
If its being used as a holiday home , it still needs to be available for rent at market rates if you are using it as tax deduction .
Is it even on an short term booking website.
Its pretty easy for the ATO to check these days.

 

I think the post was merely commenting that in order to get insurance cover, you could change the use of it to a holiday home. If it's owned outright, then you aren't going to be claiming any mortgage expenses from the ATO, and you can probably claim other expenses as a proportion of the time it was available for rent. You can have a holiday home for your own personal use. It doesn't have to be available for others.

 

Stockton ... but it's pretty much the same everywhere. Apparently people are still looking but only moving if absolutely necessary. We could've kept it higher but - as there is no mortgage - I'm happy to take a lesser amount on a 6 months lease

 

No dramas - wasn't taking the advice and all over it tax-wise. Nothing puts the willies up me more than remotely considering, even in a brain flash moment that is not acted on, of crossing the tax office

 

. Agree with this wait and see if they qualify for Newstart

 

You should get it rented if you're happy to go that low. Our new expensive one.....yep, you know the one, has an applicant for it. It settled on Monday. Rental estimate was originally $790pw, but we got the agent to drop it to $750pw, which is the lowest on the market in the area, with a further drop to $700pw if they'd pay upfront for 6 months. Applicant is for $720pw with the first three months paid in advance and has great references, so we're going to take that. Only downside is they can't move in for another two weeks.

 

So do landlords. The mentality in this forum of a firm no against rent reductions in the current environment is insane. I hope the same landlords don't whinge when they can't rent out the property for 12 months after a tenant leaves.

This is where it needs to be a two way discussion. If I was a landlord I would be wanting a good tenant to remain. If I was a tenant I would want housing security but also be raising the prospect that with lack of a reduction I would be looking at one of the recent value for money offers on the market.

Rent levels will drop in this market. People just need to accept that. No amount of justifying whether your tenant can or can't pay their existing rent with government support changes that.

Given everything going on at the moment, I'd argue that's a pretty good outcome. Only 10% below original rental estimate in this environment with a tenant that looks like they have ability to pay. I suspect you will be doing better than most in a few months with that.