NSW Pricing the rent in a new lease agreement during this pandemic

Discussion in 'Property Management' started by giraffez, 25th Mar, 2020.

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  1. giraffez

    giraffez Well-Known Member

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    It sucks to be in a position right now where your lease agreement is almost up. One of mine will happen in May. PM hasn’t reached out to me yet so not sure whether tenant wants to renew or move on.

    Given the situation with the lock downs and the economy being hit hard, and people losing jobs and all, how does it impact rent prices? Am I expected to reduce it? And does it make a difference if it’s a renewal or a new tenant?
     
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  2. wylie

    wylie Moderator Staff Member

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    You could allow it to roll into a month to month (assuming that works with your insurer) or simply offer a new lease at the same amount.

    That would mean tenants aren't asked whether they wish to stay on, and the discussion can be avoided for now.

    I checked our local area and prices don't seem to be any cheaper, but things are changing so quickly.

    Give your PM a call and ask her opinion?
     
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  3. Luca

    Luca Well-Known Member

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    Yeah don`t see the issue?!?! Business as usual. Renew at the same amount if not more. If the tenants comes back asking for a discount then you can assess. Unless you where thinking to give a discount upfront?
     
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  4. giraffez

    giraffez Well-Known Member

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    Not really. Given the media this week (and last) has harped on about rent falling repeatedly and new landlord rules (which hasn’t eventuated just yet) I just thought it would be the obvious thing the tenant would be asking for.
     
  5. bunkai

    bunkai Well-Known Member

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    If they lost their job then you treat it on the merits of the day. It sounds very likely that there will be more support coming based on what is happening in the UK for example where 80% salary up to GBP 2500 per month is being funded.

    If it is business as usual, then let it go into periodic - who wants to move during a pandemic.

    If you are worried about vacancies - then maybe a fixed lease at a new rate.
     
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  6. Lacrim

    Lacrim Well-Known Member

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    +1. Stay silent and let it roll month to month.
     
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  7. Ummm

    Ummm Well-Known Member

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    Yep, this is what my LL has done. Ultimately if the market drops I will be asking for a reduction in rent to match the market. As would be expected by anyone. I've had substantial rent increases in the past to match the market so it works both ways...
     
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  8. Phoenix Pete

    Phoenix Pete Well-Known Member

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    If the lease states that rent is $X per week then once the lease expires it becomes a week-to-week lease.

    Month-to-month leases only apply to mainly commercial/industrial/rural leases and the few residential leases that are based on a calendar monthly rental.

    So many people keep using the term 'month-to-month' when in most cases, it's incorrect terminology.
     
  9. thatbum

    thatbum Well-Known Member

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    In residential tenancies, the correct term would be periodic tenancy if you want to get technical. It's not really week-to-week since the period of payment doesn't really make any other difference.
     
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  10. wylie

    wylie Moderator Staff Member

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    As @thatbum says it might not be the correct terminology, but it certainly isn't week to week if you want them out. Allowing tenants to roll into a periodic tenancy means they can leave with just two weeks' notice, whilst I'd have to give them two months (without checking). That makes it very difficult to plan tradies. I could give them two months' notice, book a painter, and find they leave two weeks later.

    Or you find yourself with two weeks' notice they are leaving in mid December.
     
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  11. Mel Morgan

    Mel Morgan Sydney Property Manager Business Member

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    Actually in NSW on a periodic tenancy its 3 weeks notice from a tenant and 90 days notice from an owner...but yes after giving 90 days notice you could find that they can up and leave at any point.
     
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  12. abc_123

    abc_123 Well-Known Member

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    Don't approach tenant, just let it go periodic and wait and see what happens is what I would do.
     
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  13. marmot

    marmot Well-Known Member

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    The rental market has been turned on it head over the last month, with big increases in listings right across the country with Tasmania the worst affected, even across Sydney and Melbourne listings have gone up by about 20% over the last couple of weeks, according to an article on Domain.
    Inner Sydney and Bondi have also been hit pretty hard

    Looking for a rental? New listings flood the market as hard-up tenants leave
    STATE/REGION NUMBER OF NEW RENTAL LISTINGS YOY % CHANGE TO PREVIOUS 4 WEEKS
    NSW – Sydney City 930 163% 162%
    NSW – Eastern suburbs 2301 61% 51%
    Vic – Stonnington 1023 81% 51%
    Vic – Inner City 1313 79% 55%
    QLD – Brisbane 1420 31% 53%
    QLD – Cairns & District 394 55% 51%
     
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  14. +men

    +men Well-Known Member

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    I am having lease expire soon on Aug.
    Tenant has been paying on-time throughout this COVID-19 period.

    Is it a wise move to offer 5-10% reduction on new 12-month lease?
     
  15. wylie

    wylie Moderator Staff Member

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    What are comparable properties in the same area renting for? If rents have softened then you risk the tenant moving on. If rents are holding up you have less risk of that.
     
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  16. JValk87

    JValk87 Member

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    Don't assume anyone's circumstances. My wife and I have remained on a periodic arrangement because we like the flexibility. We aren't asking for a drop in rent (at least yet) because 1) we wouldn't save much and 2) we would be asked to sign a new lease.
     
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  17. The Gambler

    The Gambler Well-Known Member

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    Your PM should be across this. They should know the comparable rental prices in your area and will instruct you accordingly.

    That is, if you're using a PM. Otherwise what Wylie said it good advice I reckon. Check the local listings to see what is going on. Even if you have a PM, checking them out is a good idea just to see so you can then relay your opinion to your PM.

    I just got a new tenant this afternoon. On the market for just over a week. We didn't advertise at a discount but the new tenant asked for the 20 a week discount and I was totally fine with that.

    There wasn't a lot of interest compared to normal times though. Even though I had time on my hands to find somebody the prospective renters seem really good.
     
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  18. MB18

    MB18 Well-Known Member

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    I just went through this last month as a tenant. Fixed term lease expired. Heard nothing but crickets from the PM about a renewal.

    Chased it up and the rent was the same for a 12 month renewal (didnt even recieve an appraisal to justify the rental amount as I had in the past).
    I offered 20% less and provided my own 'appraisal'. The offer was declined on the PMs reasoning that vacancies are up but prices holding steady.
    I terminated the lease and the property is still sitting empty with a 15% reduction on the asking rent after two reductions.

    Offer a discount to re-sign or as is for periodic.
    Consider that staying silent might not be as smart as it seems. The tenant should know they hold a strong position on a periodic lease at the moment and may well shop around and leave you with minimal notice to vacate. Get them on board before expiry ideally.
     
    Last edited: 13th May, 2020
  19. Ummm

    Ummm Well-Known Member

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    This happened to a friend of mine, landlord told them they were selling the place, so tenant found another place straight away and gave the minimum notice period to move out in order to secure the new property and not pay double rent. Then the landlord had the hide to be upset with them for moving out. Ah dude...you are selling the house from under them with no guarantee that a new buyer wants a tenant..along with all the open houses with randoms opening your cupboards.
     
  20. balwoges

    balwoges Well-Known Member

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    Offer a new lease same terms as before, if the tenant wants the rent adjusted that would be the time for a discussion ... :)