Property investors are among the many groups facing a tough future due to the economic impact of the coronavirus.
While political and community focus has been on the plight tenants, property investors face the reality that they must service the bank loans secured to provide the rental accommodation.
Moratorium on evictions
The Federal Government mandated no evictions of any tenant facing virus-related hardship may be made for six months. Its ministers have also stated this is not an invitation to tenants to stop paying rent.
With unemployment rising, many tenants continue to approach landlords and property managers for rent relief. Some who are suffering hardship have already vacated their property, which will lead to lease-breaks.
None of this is good news but your property manager can help you manage through it.
Code of conduct for negotiations
The Federal Government has provided a code of conduct for how negotiations should be conducted between the landlord and tenant.
This has helped landlords who have wanted to be empathetic to the plight of their tenants while still being able to make their loan repayments.
But this is a juggling act for everyone.
If you are a landlord there are various government stimulus packages designed to help those who have lost their jobs or suffered a reduction in hours and wages.
Agreeing to a rent reduction
As a landlord, you should encourage your property manager to make regular contact with the tenant, enquiring about their situation and health. This will allow you to make an informed decision if, or when, a request for rental reduction is made.
Where a reduction is requested, an assessment of the tenants’ financial situation should be made with their co-operation. Often, there is more than one person in an apartment or house, so the burden of rent might be more easily or equitably shared.
You may agree to a reduction in rent until the Government has declared an end to this crisis, or when the tenant has found new employment. Any agreement should be made in writing to protect both you and the tenant.
Understand your situation first
Of course, this is only half the equation for landlords.
If you are having trouble servicing loans related to the rented property due to a fall in rental income, you should seek advice from your accountant, or contact your bank directly.
Banks have reassured customers that they, too, will look favourably on those facing financial distress.
Understanding your financial situation, and the impact on any reduced rent payment is essential before striking an agreement with your tenant.
