NSW No evictions in Sydney

The tenant in my small 2 bed apartment in Sydney has requested a rent reduction, citing loss of revenue in small business (hard to verify) and noting govt stance on no evictions possible.

How are other IP owners responding to such requests in NSW?

Is 20% reasonable??

 

Why? Will the service station start selling you cheap petrol because your income has dropped?

Have they cancelled mobile plan, nbn, fox tel etc, stopped drinking beer etc ?

The hot water system fails. $2000 repair. Will they still expect you to fix it?

 

This was posted by someone else.. part of an email I received from a property manager today.

"We are also advising people with the Corona Stimulus Package a couple with two children paying 30% of their Centerlink payment plus rent assistance would be able to pay $472 per week and still have $912 per week to live on" The Australian median rent of $430 per week."

It sounds like there's a lot of govt assistance for renters and a few options they can take up before requesting their rent be cut. Not to mention access to $10-20k of their super.

 

There are a number of financial support packages available, the main ones are:
- Extra centrelink income, about $550wk p.p.
- Jobkeeper, $750wk p.p.
- Early access to Super.

Note that if you offer a rent reduction, that loss is uninsurable so it's purely charity. There may be the rare case where a rent reduction is a practical option, but realistically there's a variety of different ways to assist without going that far. Although I've been very lucky in my portfolio to have no new problems at this stage, I believe most people are discussing payment plans to defer a portion of rent where necessary until further financial aids kick in.

That being said, there will be rents (2-Bed in Sydney, how much?) that are so high that the aid packages aren't adequate. In that case, tenants could try to get in a roommate (but everyone is doing that right now), defer a portion of rent for now or break lease. If they're going to break lease, it could be messy for you, and you might consider a rent reduction?

 

And if you cut rent 20% and he doesn't pay that he still can't be evicted and you have reduced any future claim you might have.

If he is making veiled threats to not pay at all in order to get a rent reduction why would you think he might not take further advantage. If he can only pay 80% then he is free to just pay that much whether you agree to it or not and you can't do anything.

I wonder if it is legal to make a rent reduction conditional on that reduced rent actually being paid on time. Once tenant falls into arrears rent goes back to normal. That gives some incentive to actually pay as you will have a greater claim against them later.

 

The extra is 550 per fortnight

 

Yes, 20% is reasonable.

 

Dear tenant,

Unfortunately I can’t grant your request because my income has dropped more than 30% and I am struggling to pay my rent. I also can’t break my lease and move into my own property because I am not allowed to evict you - thus making my financial situation even more difficult. We are all in this together.

LL

 

I like this. I'll keep it handy in case I need it.

 

In the Melb/Syd markets, if you could maintain a good tenant and stable income for 20% - I suspect you will be doing much better than median overall in months to come.

The arguments about what a tenant can/can't pay or whether they drink beer is irrelevant. The property market is getting hit hard right now. Anyone who thinks 2019 rent levels will be maintained is not reading the situation correctly.

Whether petrol/beer/price of skittles changes or doesn't change is irrelevant. They have their own markets. Supply and demand. We now have a situation where there are a lot less people with the ability to pay what was being paid.

 

That’s right, thinking long term on a practical level....it may be better to have a tenant stay paying 80% which probably reflects market conditions then losing them and having vacant property for 6-12 months

Agents are saying rental demand has fallen off a cliff in inner sydney... no one is looking for a new rental apparently. A lot of itinerant workers are working remotely from elsewhere which makes sense...

why pay a premium to live in a city that’s shutdown if you can avoid it?

 

You clearly get it...

I suspect you will be fine for some time to come. Especially with a new tenant right now at a pretty good rate. I suspect you beat the real dip.

 

I think you're panicking too much

 

I don’t like this... you could be looking at a tenant who decides to not pay rent and one can’t evict them for next 6 months...

That will cost you a lot more in long run than 20% haircut

 

But be careful you are not seen as attempting to give financial advice, particularly suggesting they access super.

I know a tennant who is stuck interstate, and been notified they are now redundant.

They are waiting to hear back from their offer of a 'tempory' 50% rent reduction. At the end of the day they dont have an income anymore, cant get back to NSW, basically cant be evicted, so 50% is better than nothing. Where do you expect a new tenant is going to come from in his environment anyway?

The landlord will have to either negotiate a break with the bank, or loose half thier income through no fault of their own - much like the tenant has lost thier entire income through no fault of thier own.

20% sounds like a good reduction.

 

He could be scamming you so don't give him a free haircut without proof. Why give him a discount when he's got lots of financial assistance from the govt to help him pay his rent

 

I don't think its a good idea for any lessor at the moment to agree to a rent reduction, as opposed to a rent deferral or partial rent deferral.

We don't know how long this whole thing is going to go on for after all.

Even if you want to offer an actual waiver of rent, then you can just do it at the end of the moratorium period.

EDIT: This also solves the problem of needing to ask for "proof", which I think is a giant waste of a lessor's time imo.

 

What the... what is this default assumption on this forum that "the tenant could be scamming you".

The landlord has absolutely no right to proof of a tenants financial situation. You are their landlord - not their financial adviser. This is where landlords and PMs cross the line (and why ASIC is clamping down on this behaviour).

We are in a pandemic and there is this default amongst LLs here of complete distrust. This mentality does property investors no favours. Also - it is not a scam for someone to ask for a rent reduction.

 

Recognize that the balance of power is mostly with the Tennant now it seems.

I I haven't been closely following the current policy but it broadly suggests you have one of three options:

1) You can afford the 20% reduction, in which case take it.

2) You cannot afford it, in which case you much less afford a Tennant paying nothing that cant evict.

3) Call BS, refuse to budge, and expect him/her to continue status quo.

I doubt you will get far with option 3.

Take a walk around any neighbourhood, unless he/she owns a grocer or a pharmacy you can be confident the business is suffering.

 

You need to calm down on that "absolute" position. You could similarly say that tenants have absolutely no right to demand a rent reduction.

Funnily enough, when two parties both have something the other has power to give, then there's a scope for negotiation.