PM announces landlords will have to do their bit!!

Discussion in 'Property Management' started by Keentolearn77, 20th Mar, 2020.

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  1. Keentolearn77

    Keentolearn77 Well-Known Member

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    As a landlord I’m feeling a little ill and stressed,

    PM press conference today
    “All Australians are going to be making sacrifices, obviously, in the months ahead.

    “And everyone does have that role to play and that will include landlords, at the end of the day, for people who are enduring real hardship.”

    If tenants dont pay the rent or reduced rent, how do us landlords pay our home loans, so many questions :(
     
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  2. Peter2013

    Peter2013 Well-Known Member

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    You should have a buffer of 6 to 9 months rent to use.

    This would be the same buffer you use if your property is empty for 6 months and you can't find a tenant, or if you have any expensive maintenance or repairs to undertake.

    Surely you have a buffer??
     
  3. wylie

    wylie Moderator Staff Member

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    If residential landlords "should" have a buffer of 6 to 9 months, why doesn't that apply to everyone else?

    We have prepaid our loans for the next twelve months because we want to take the pressure off us while we build townhouses.

    But for so many years, we didn't have that type of buffer. It's rare for any property to be empty for six months due to not being able to find a tenant, but when we had to lift our houses, we were told to allow three months empty. I allowed four months but it was six months due to various hold ups.

    But major renovations don't just happen. They are planned, and any planning should obviously allow for no rent coming in, and also allow for hold ups.

    We rely on rents to put food on our table rather than rely on the pension to put food on our table.

    That doesn't mean we are "rich landlords" by any stretch. We've done the hard yards.

    But I feel for those who rely on rent to pay the mortgage on the IP. Those landlords are just as entitled to get help if they can't pay their mortgage due to their tenant not being able to pay their rent.

    If the tenants lose jobs due to the pandemic, why should they get a helping hand when landlords still have to meet the mortgage, and have lost their "income" due to the same pandemic?
     
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  4. The Falcon

    The Falcon Well-Known Member

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    You’ll hold on if you can and sell it if you must. You aren’t guaranteed a positive return when you invest.
     
  5. wylie

    wylie Moderator Staff Member

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    Wouldn't that also apply to any home owner with a mortgage? They aren't guaranteed to be able to hold their house if they lose their job at any other time? Why should it be different for those who have borrowed to get ahead rather than spend their spare money on "things"?
     
  6. wylie

    wylie Moderator Staff Member

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    Anybody placed into hardship due to this Covid should be able to ask their bank if they can have a repayment holiday in my opinion. Not just those who have only a housing loan.
     
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  7. The Falcon

    The Falcon Well-Known Member

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    Agreed. No argument there. “Borrowing to get ahead” vs “spend money on things” is not different. Just a personal judgement as to which will bring the most reward.
     
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  8. Peter2013

    Peter2013 Well-Known Member

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    Under the current government we have seen household incomes and wage growth fall, but costs of living increase. Real household disposable income has been falling since 2016.

    If by 'everyone else', you are referring to renters, on aggregate they have been dipping into savings since 2016 to keep their heads above water. There is nothing left.

    Contrast this with Landlords who have seen surging house prices and rents. That's why the Morrison government is targeting landlords. Those earnings can be tapped in our time of need, and we surely need every little bit.

    But remember 'everyone else' doesn't include the banks. They have also been asked to help out in these unprecedented times.
     
    Last edited: 20th Mar, 2020
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  9. chrish

    chrish Active Member

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    Not everyone has a loan, but for some people rental income is the ONLY income. If that goes, then what? Centerlink?
     
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  10. spludgey

    spludgey Well-Known Member

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    I 100% agree, but I do actually think that everyone should have that 6 to 9 month buffer.
    But (un)fortunately most people are terrible with money.

    PS: Was there anyone else questioning why a property manager would make statements like that? ;)
     
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  11. Dan Wood

    Dan Wood Well-Known Member

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    Some banks are said to be freezing home loans I'm unsure if this applies to investors.

    That is if you're directly affected by COVID-19.
     
  12. PandS

    PandS Well-Known Member

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    They both joined at the hip

    those who borrow and invest need those who spend all their money, else the economy wouldn't grow as much and you don't have many renters and there isn't many business around and less credit going around and less return for your properties :)

    Look at it now imagine these guys don't spend money and just save, everyone suffers
     
  13. Shogun

    Shogun Well-Known Member

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    Just waiting for an email from PM (property manager) saying they will reduce management fees in this turbulent time. :eek::D
     
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  14. Blueskies

    Blueskies Well-Known Member

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    Presumably dipping into capital, either via selling down or refinancing. Centerlink isn't going to help out someone with a million plus in investment assets.
     
  15. Shogun

    Shogun Well-Known Member

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    Not really true for WA

    Being West Australian I understand all that matters is the East Coast ecconmy
     
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  16. wylie

    wylie Moderator Staff Member

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    Show me the surging house prices and rents since 2016 and I'll show you my rents that haven't risen in that time. In fact, two houses with long term tenants were renting at $580 per week and $480 per week and when we renovated the houses as part of the process of repositioning them on the block, our rents dropped to $500 and $450 per week.

    It's dangerous to generalise.

    Edit: Forgot to mention the house at Balmoral that dropped from $615 down to $500 and has now, after probably four more years made it back up to $595 per week, whilst land tax takes one quarter of our rent before we start paying the rest of the costs of being such lucky, rich landlords.
     
    Last edited: 20th Mar, 2020
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  17. HUGH72

    HUGH72 Well-Known Member

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    Surging rents, Where? They have barely tracked inflation in many cities while insurance premiums have doubled in the last 5 years and Council rate rises consistently run ahead of inflation. CBA just announced that they will not pass on the recent rate cut other than for small and medium businesses.
    Your perception is a little different to reality.
     
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  18. HUGH72

    HUGH72 Well-Known Member

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    I have been advised that of of my agencies will not be doing routine inspections until advised..:eek:
    Hope they don’t advise the tenants of this. They are now just a rent collector charging 8.5%
     
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  19. TMNT

    TMNT Well-Known Member

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    well that should apply to tenants too, you should have a buffer, and not live week to week, so if you cant pay your rent, youre out!
     
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  20. abc_123

    abc_123 Well-Known Member

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    It will be incredibly difficult to sell a property if it comes with a lease in place with a freeloader who is entitled to live in it indefinitely for nothing whilst the owner has to pay all costs like rates etc for no return. Assuming there was at least a right to recover some unpaid rent from the bond if the tenant ever does choose to vacate, the tenant would also be aware that they wouldn't get their bond back anyway so they would treat the property like rubbish and leave it filthy. I would imagine if you sold a property with a freeloader in place you would get a fraction of the amount the same non-tenanted property would acheive. Probably not enough to cover the loan. So selling up won't be much of an option for landlords who can't afford 6 months or more of supporting a freeloader.

    If this comes into place I imagine noone will purchase a tenanted property whilst the law remains in place (unless at absolute bargain prices), nor will anyone lease or release a vacant property, they would sell it or leave it empty, empty is better than putting someone in it who can legally decide they don't want to pay rent and is completely impossible to evict.

    A law like this would have an impact on property managers too, they would have to change their model of charging landlords from a percentage of rent collected to some other method so they continued to get paid for their time managing these zero rent properties. So the landlord would also be paying similar property mangement fees on top of all the other costs for their zero rent.

    Yes so many questions

    Does the right to remain in the property free continue for the non payer even if a fixed term lease expires and/or valid notice has been given on grounds other than their non payment. eg a landlord may genuinely choose to move into the property themselves under these conditions and give an otherwise legal notice to do so, but if the tenant is a non payer is it still not possible to evict them due to their non payer status. I guess it could be considered to be like a retalitory eviction for the tenant exercising their rights to a repair. The tenant would be exercising their legal rights to not pay rent, the attempt to move into the property to avoid the issue of having to provide the free rent would therefore be illegal.

    Will the tenant be under any obligation to pay any benefits they receive designed for rent to the landlord so they are not living completely rent free? Current rental assistance payments don't go to the landlord so the tenant can just spend them and not pay rent (of course currently they can actually be evicted for this). I am guessing the payments designed to assist with rent will probably be paid directly to the tenant, and the tenant can just squander them on other things with no consequence.

    I presume the freeloader will still have rights for everything to be repaired in a timely fashion too. Usually if a tenant takes a landlord to tribunal for failure to repair something in a timely fashion, a rent reduction is awarded, if the tenant is paying $0 I wonder how this will work, perhaps there will be also be a law that the landlord can be fined or have to pay compensation in addition to the free rent. Because I can imagine most landlords, even if they can afford to, wouldn't repair anything for the freeloader tenant unless it was something that was going to damage the property if not repaired. No hot water? Freeloader can have cold shower.

    If the bank sells the property due to the landlord being unable to pay the mortgage due to the freeloader, or the council or the state government sells the property due to failure of the landlord to pay rates, water charges, land tax etc, can the tenant be evicted by the bank/govt at that point in order to acheive a reasonable value for the property? The bank probably can't achieve sufficient from the sale of the property to cover the loan even for a low lvr loan if it comes with the freeloader in place.

    My landlord insurance covers 14 weeks rent default or $5000, whichever is less. The landlord must take steps to evict in order to make the claim for rent default, so a landlord who voluntarily allows the tenant to be non rent paying for a period on the basis they will pay it back will lose the right to claim if the tenant doesn't pay it back. I am sure the insurer hadn't counted on the law changing so radically so the non payer simply couldn't be evicted at all and there is nothing specific, of course, in my policy that deals with that scenario, it might take a legal perspective to determine if insurers would be obligated to pay for at least the 14 weeks in this situation. The insurance payout for rent default, doesn't occur until the tenant has vacated leaving rent arrears in excess of bond so it won't help with cashflow of course.

    I wonder if when they draft this legislation they will consider any of the above.
     
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