Non paying tenant - It's started.

Discussion in 'Property Management' started by GoneFishing, 1st Apr, 2020.

Join Australia's most dynamic and respected property investment community
  1. Owlet

    Owlet Well-Known Member

    Joined:
    25th Jun, 2015
    Posts:
    757
    Location:
    VIC
    An observation in these situations is that people in difficulty tend to look to the government for assistance. Is there no family support or assistance? Or do Australians just have the mentality to ask the government or their landlords rather than their parents or siblings? (Yes - not everyone has family).
     
    1961 likes this.
  2. geoffw

    geoffw Moderator Staff Member

    Joined:
    15th Jun, 2015
    Posts:
    11,654
    Location:
    Newcastle
    There is some problem however about landlords making adjustments in rent now.

    1. If an agreement is reached now with a tenant to adjust rent, and the landlord has landlord insurance, they may not subsequently be able to claim the loss on that insurance.
    2. In most states, details of the government's proposal have not yet been worked out. It's possible that action taken now by a landlord may invalidate possible relief.
     
    1961 and Michael Mitchell like this.
  3. adprom

    adprom Well-Known Member

    Joined:
    3rd Apr, 2020
    Posts:
    170
    Location:
    Melbourne
    Businesses in general don't get bailouts. The only ones that do are ones that provide an essential service and simply cannot survive (Rex airlines etc).

    I am generally against business getting that treatment anyway.

    Re homeless - they are but as I think you would agree, that is a whole different kettle of fish tying into mental health issues as well. A lot of homelessness requires fixing those much bigger problems.

    That's kind of relevant - you you see stock market investors getting subsidised cos their dividends are down and they have significant capital losses? Do you see government propping up losses in super funds? No - so why should property investors get special treatment?

    My preference has always been to invest in shares, managed funds etc.
     
  4. geoffw

    geoffw Moderator Staff Member

    Joined:
    15th Jun, 2015
    Posts:
    11,654
    Location:
    Newcastle
    Actually, while not bailouts, businesses are getting some form of aid - fee relief, interest free loans, payroll tax deferral, grants and wage subsidies.
     
  5. PurpleTurtle

    PurpleTurtle Well-Known Member

    Joined:
    10th Jan, 2016
    Posts:
    121
    Location:
    Melbourne
    But nobody here is asking for any special treatment like you describe.
    If capital value declines - investors know that is a risk and deal with it.
    If a lease ends and the rental market has changed and you have to reduce the price to re-let - investors know that is a risk and deal with it.
    What is being discussed here is tenants asking to alter an existing lease.
     
    1961, housechopper2, skater and 4 others like this.
  6. adprom

    adprom Well-Known Member

    Joined:
    3rd Apr, 2020
    Posts:
    170
    Location:
    Melbourne
    That is precisely what this is about - with massive job cuts, a lot of leases will need to be adjusted.
     
  7. PurpleTurtle

    PurpleTurtle Well-Known Member

    Joined:
    10th Jan, 2016
    Posts:
    121
    Location:
    Melbourne
    And property investors being asked to use their asset to provide social housing. This is not something being asked of share investors.
     
    skater likes this.
  8. adprom

    adprom Well-Known Member

    Joined:
    3rd Apr, 2020
    Posts:
    170
    Location:
    Melbourne
    The alternative is that the asset is empty with no income.

    Share investors? That's not true. The companies they invest in (banks, telcos etc) are all expected to trump up for the social good over the next 12-24 months.
     
  9. Silverson

    Silverson Well-Known Member

    Joined:
    11th Jun, 2016
    Posts:
    1,149
    Location:
    Melbourne
    Agree, pm didn't agree just forwarded email from tenant. I spoke to tenant and agreed.
    I know as an investor it's not a great way of looking at it but, the after tax loss from reduced rent for six months won't change my life dramatically (in this position through hard work and sacrifice, not good fortune) however it may change their life for the better, so as an investor it was not a great choice but as a person I think I've made the right one.
     
    ww2_nut, Caz2019, wylie and 3 others like this.
  10. Silverson

    Silverson Well-Known Member

    Joined:
    11th Jun, 2016
    Posts:
    1,149
    Location:
    Melbourne
    Now that would be nice
     
  11. Omnidragon

    Omnidragon Well-Known Member

    Joined:
    17th Oct, 2015
    Posts:
    1,693
    Location:
    Victoria
    Yes but Gladys and Andrew Daniels and Anna Palaszczuk need land taxes, pokie taxes to fund those business class flights I think. So it might be a bit problematic...
     
    Last edited by a moderator: 7th Apr, 2020
    Silverson likes this.
  12. NedKelly

    NedKelly Well-Known Member

    Joined:
    3rd Aug, 2015
    Posts:
    332
    Location:
    Gold Coast
    Let us know how you get on in 6 months time when your tenants discover they are much better off with a 50% reduction in the rent and all the JobSeekers allowances and tax rebates and they still can't get a job.
     
    1961 likes this.
  13. Silverson

    Silverson Well-Known Member

    Joined:
    11th Jun, 2016
    Posts:
    1,149
    Location:
    Melbourne
    After six months when they can be evicted for not paying rent? If they decide they don’t want to pay a fair (market rate) rent, maybe not where it was but certainly not half then I’m afraid our arrangement can no longer be.

    edit: apologies didn’t read your reply properly.
    If after six months they still haven’t found work etc then I would probably consider our current arrangement to be honest.
     
  14. MWI

    MWI Well-Known Member

    Joined:
    17th Jul, 2017
    Posts:
    2,287
    Location:
    Lower North Sydney NSW
    I think it would be more useful to provide solutions to challenges... instead of who will come out better at present or in the end?
    What is a tenant, a landlord, a business, an ECONOMY for that matter? It is just PEOPLE, interconnected with each other in some way!
    So I think what most forget that these economic decisions, how ever they will play out will eventually have an effect on ALL OF US.
    What is this crisis about, if not logistics, timing and liquidity. So plan some short term measures instead!

    Residential Real Estate Underpins Australian Wealth - let me repeat that.
    RESIDENTIAL REAL ESTATE UNDERPINS AUSTRALIAN WEALTH.

    Let's look at the numbers and make your own conclusions from that?

    Residential Real Estate - $7.1 Trillion = 54%
    Australian Superannuation - $3.0 Trillion = 23%
    Australian Listed Stocks - $2.0 Trillion = 15%
    Commercial Real Estate - $1.0 Trillion = 8%

    10.4 Million - Number Of Dwellings
    $1.8 Trillion - Outstanding Mortgage Debt
    Around > 50% Household Wealth Held In Housing
    437,008 - Total Sales p.a.
    $267.8 Billion - Gross Value of Sales p.a.

    What those figures imply to me, I don't know about what others think, but housing is quite a substantial asset class for our economy. So I somehow doubt how government would allow to destroy that, they realise they cannot allow some major banks or companies to go under or else we all sink?
    And since we are all interconnected in some way, so are the stocks on our ASX. What are the top companies on our ASX, if not banks and mining and CSL. Banks are connected to housing then, right, so how would that play out?

    So the government is people too, if they lack their revenues (and numbers tell us a lot where they get them from, right?) how will the whole economy then function too?

    I am not here to scare, I just illustrate the numbers for your own thoughts and conclusions to make. Instead we should assess our own situations work together and see what solutions and challenges we can change, adapt and innovate.
    So work on your cash buffers and negotiate and make some short plans too, realise some responsibility lies with each one of us, not just government or someone else to solve our challenges in adversity.
    What do you think, I think the world we live in has already changed but many people need catch up time to realise and to change too?
    Stay all healthy and safe!:) I need my daily exercise so off to my hourly walk!
     
  15. See Change

    See Change Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    5,110
    Location:
    Sydney
    Many of our tenants are in cheaper areas and so far we haven't had any contact from pm's .

    We have a three nicer properties and one of those is occupied by a young couple who have just had their first baby . Both work , but she's been laid off .

    Agent told them ( before talking to us ) that they might be able pay less and catch up with that later on .

    We've told the agent that we don't want to do that . We've asked them to say what they can afford and we'll let them know if that's ok . we don't want them running up a debt which they have to pay when things pick up . We wouldn't want our kids being put in that position so we don't want to put someone else in that position .

    Luckily we are in the position where we can afford to do .

    I did tell the agent that I don't want to decrease the rent on the lease , but would prefer to have the lease at the existing level , but we can give them an undertaking we will accept a lower amount while this is going on . Not sure on the legality .

    Agents comment was " it's unprecedented and there was no rule book " .

    They want to say , we'd like them to stay .

    Cliff
     
    Kassy, craigc, mrdobalina and 4 others like this.
  16. TMNT

    TMNT Well-Known Member

    Joined:
    23rd Jul, 2015
    Posts:
    5,572
    Location:
    Melbourne
    I think the more feedback the right people (even the half right people) get as to landlords feedback, this will be the best way to get our message across, other than chaining ourselves butt naked to the gates of these peoples house or offices,

    Simon, can we have a sticky thread of relevant contacts/emails?
     
    skater likes this.

Property Investors! Ready to Pay Less Tax? Estimate how much Property Depreciation you can claim on your Investment Property. Washington Brown's calculator is the first calculator to draw on real properties to determine an accurate estimate.