NSW Tenant asking for BIG RENT REDUCTION via Agent

Discussion in 'Property Management' started by money, 29th May, 2020.

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  1. money

    money Well-Known Member

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    What would people here do in this type of situation, would you take the tenant's offer?

    We have a property in Glebe, near the CBD which is rented out to the same tenant (a family) for 6 years. They were paying in the low $800's per week and on a periodic lease.

    Our tenant previously lost their job 2 months ago due to COVID-19, a new job (on probation) therefore not eligible for JobKeeper as apparently he wasn't re-hired. When he lost his job he emailed the agent (with his employment termination letter) that they would either need to vacate & move to a cheaper apartment as they do not know how long this will go on for or offered $180/week less until they can find work again or this situation is resolved. We accepted the offer as we didn't want to lose a tenant during these times.

    Agent followed up with him and tenant said he's interviewed for a role & it's progressing well. He also said "Obviously market dynamics have changed, therefore can you please ask the owners post recommencement of employment we would be willing to sign a 12 month lease" at $80/week less than the original low $800's per week.

    Our agent said they are advising all landlords to negotiate for new leases to keep all current tenants as leasing during this time is quite difficult. They have properties for lease and within the last week over 300 additional properties have been listed online. They suggest to accept the tenant's offer but at a 6 months lease rather than 12 month.

    If we re-sign a new lease the agent will charge 1 week's rent, which is a lot considering it takes a few minutes to fill in a few boxes on the page and they are already getting a monthly management fee and monthly statement fees. What do people here think of all this?
     
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  2. ChrisDim

    ChrisDim Well-Known Member

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    You should take the $80 reduction in a heartbeat @money. If you go to the market right now with a pre-covid $800 vacant property, you can expect a rent of $650-$700 or months with no enquiries at original price. Last time I looked there were over 600 1 bedroom apartments and also over 600 2 bedroom apartments advertised in the Sydney CBD with rents dropping by $100 to $200. I am sorry about the bad news but try to weather as best as you can the next 12 months. You don't want to lose this long term good family.
     
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  3. Mat

    Mat Well-Known Member

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    Maybe ask to meet them in the middle - you've given them $180 a week off for two months and they're asking for $80 a week off into the future. Perhaps go with that 12 months but a slightly less aggressive reduction. Give and take as it were.
     
  4. wylie

    wylie Moderator Staff Member

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    I'm with @ChrisDim on this. Better to take the "sure thing" at a slight discount than have it sit empty and risk losing even more each week, plus the renting fee plus possibly have a tenant who doesn't pay up. You know these are good tenants. I'd keep them while this Covid situation is happening.
     
  5. Michael Mitchell

    Michael Mitchell Property Manager Business Member

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    You should not pay for a lease renewal, everything else is fine - if the Agent actually charges that (serious?), probably a bigger issue than your Tenant :)
     
  6. thatbum

    thatbum Well-Known Member

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    What a misleading thread title - is this really a "BIG RENT REDUCTION" in all caps?

    One of my tenants is currently paying half their usual rent... and this is 10% off on a premium price bracket rental?

    And isn't this in the same areas that rental listings are being flooded with ex-airbnb stays for cheap?

    This almost seems like a success story to me.
     
  7. Buynow

    Buynow Well-Known Member

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    Sydney rents have been declining for a while now. This sounds like a great deal for you.
     
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  8. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    I would think you actually have a great tenant who is very practical. I have heard many far far worse stories where people have just said - I offer $80 not $800. Thats it.
     
  9. MB18

    MB18 Well-Known Member

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    Glebe at only 10% off? Take it!

    I am in the neighbourhood and offered 20% less to re-sign in April.
    Offer was declined so I moved a couple of streets over.
    Guess what happened with my old place, it sat empty for a few weeks and has since been relet at....... 20% less (after three advertised pice reductions). Obviously a reletting fee and roll of the dice on a new tenant was made too.

    That was for a 2x1 unit and having been watching it closely since about Feb, the city/innerwest 2x1 rental market has tanked hugely (in my opinion).

    I am surprised you are being charged a letting fee to resign a lease, it's not as though its a new let.
     
    Last edited: 29th May, 2020
  10. Mel Morgan

    Mel Morgan Sydney Property Manager Business Member

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    We manage 9 properties in Glebe and many tenants are impacted, so a 10% reduction from pre-covid rent on a new fixed term is a great outcome. Although we recently had huge interest in a Newtown property, a lot of areas like Glebe with large student populations are not doing as well.

    I know many agents charge a lease renewal fee, which I think is quite steep as the negotiation etc is part of the job. There's no reason why you can't take it as an opportunity to either ask them to waive/reduce it as a one-off if you are happy with their service or otherwise consider a different property manager.
     
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  11. TMNT

    TMNT Well-Known Member

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    $80 off on a low $800s per week rent is NOT a big reduction, its a drop in the ocean

    a big reduction would be 40%-60%
     
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  12. spoon

    spoon Well-Known Member

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    1. 10% is not a BIG REDUCTION

    2. Would you not help someone with $80/week, $10/day, if the person is a good tenant for 6 years, with genuine reasons?

    Come on baby... ;) Let's build a reputation that landlords are good-hearted people too :D

    Change the name to: Money is not that important after all...:rolleyes: and don't live on Planet Mars...:cool:

    My apologies if it sounded rude....
     
    Last edited: 29th May, 2020
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  13. Dan Wood

    Dan Wood Well-Known Member

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    I guess the real question is, can you afford to take the $80 extra hit financially? Or are you just squeezing the tenant for money based off what the previous rent was at?

    If you cannot afford that $80 reduction, how are you going to afford the property being empty for an unknown amount of weeks of months?
     
  14. money

    money Well-Known Member

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    Thanks for all the comments. We decided to reduce the $80/week and the agent didn't charge us for the re-sign.
     
  15. Hayley Cannon

    Hayley Cannon Well-Known Member

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    I'm glad you took this option however, I feel the agent should have informed you that the new break lease fees would have put you in a worse position if the tenants decide to break the lease in say 6 months time as the break lease fee between 50% and 75% into the lease is only 2 weeks rent, notice to vacate on a periodic lease is 3 weeks. Just something to keep in mind as it is much cheaper for tenants to break leases now!
     
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  16. kaibo

    kaibo Well-Known Member

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    Is the new lease worth the paper it's written on anyway as they don't meed to honour it and prevents you from selling or moving back in to it during the 6-12 months that is signed