Coronavirus Information for Landlords
Now for the elephant in everybody’s room
The Covid-19 will have a massive effect on our economy, far more significant than we are ready to appreciate. The idea of a Worldwide Recession is quietly accepted, but people are still trying to grapple with how to manage the disease and that leaves most of us unable to think further ahead than next week. The world is changing too fast right now for us to see much past this month, let alone the next six months.
I talked to our team about the implications of the virus and how we will manage the impact of it. That conversation was 2 weeks ago, and things are changing so fast now that we are having to adapt each couple of days.
We are emailing out regular correspondence to our Landlords. If you have not received an email from us, please call the office on 02 8878 1900 or email your contact details to us at firstname.lastname@example.org so we can update our records.
The Virus and Ryde Area
This area suffered some of the first public effects of the virus. Macquarie Uni as you can imagine has had a lot less overseas students start the year, and that has dropped the overall demand for property in our area. Some of the first cases of infection were in the Eastwood area, Ryde Hospital, our local retirement homes and local schools.
The virus and how we will run our office
We started to get ready for what was happening well before many agents did, but the reality is there is only so much we can do to prepare when you have very little idea what is really needed.
One or more of our team will inevitably contract the virus and given current protocols when that happens; we will have to send our staff to work from home. We are fortunate that our team are in the low-risk category because of age (the fact that I say something like that is positively scary).
Telephones will transfer to their mobiles, and they will have their iPads with them so they will be able to take and make calls. We will maintain someone in our office to hand out keys and collect mail and so on.
We are suspending these until we have a better understanding of what practices and approaches need to change to keep our team and tenants safe. If you have a concern about your property or tenant, talk to me and we will work out what we can do.
Rents and statements
We are fortunate that we collect rent using direct debit so our team are able to manage this without the need for tenants to go to banks or post offices to pay.
Leasing property and the virus
The truth as time goes on and the spread of the infection widens, the way will lease property will have to change multiple times. The number of people out looking at property for lease is falling significantly. That could be as a result of people’s caution or fear of everything involved with moving or even government suggestions not to go outside unnecessarily.
Right now, we think we will have to stop showing property while tenants are still in residence. The fear of unknown people coming into a tenant’s home is starting to be too much for many, and the distress is counterproductive to getting the property handed back clean and ready for renting.
Open homes will be more like private inspections. Prospective tenants will be shown the property keeping numbers of people through the property at the same time down to a minimum. That probably wont be a problem because the number of people at inspections has dropped significantly. We think we will still be doing opens; however, we will have to make a lot more single appointments and share around the inspections between our team members a lot more.
Existing tenants and arrears
I think this is where things will get really hard. People will be losing their jobs, casual workers will have their work cut back, the government will help, but we have no idea how bad or long this will go on. Our approach will be to talk, lots of talking, understanding where people are at and try and assess how adverse a tenants’ circumstances are and what we can realistically expect.
We will also be talking to you a lot through the process. Things that may come up are rent reductions, rent holidays (depends how bad things get and what are the next best alternatives). I’ve been through recessions before, and a lot of tenants give notice to move back home with Mum and Dad. Again this is starting to happen.
If tenants can’t get back on their feet, we will work with them to minimise the arrears so we can get the property back on the market. One gentlemen who has been in the same property for 8 years, gave notice and is moving back overseas because the travel company he worked for has just closed down.
You can’t outrun the bear
In America, the National Park Rangers say that you can’t outrun a grizzly bear so don’t try. Instead stand still and hope he doesn’t charge. Well the virus is well and truly charging us. There is a joke that goes with that advice. The plan is to not outrun the bear, they just have to out run the guy next to them.
If the market continues to worsen and rents drop further, we will be forthright in our advice to you to adjust your asking rent quickly. We are saying that because other agents and their investors hopefully won’t adapt as quickly. We would rather they miss out on a tenant than you.
We still want the best tenant we can get. It is even more important now because a weak tenant is likely to get into trouble financially, invite people to flat with them to reduce the rent, and so on. You will hear your property manager say, ‘We have an applicant, but we don’t want him/her; instead this is what we suggest…’
Right now market rent is changing; this isn’t a wild prediction; it is happening right now. We already see it, probably again because we are closer to the first areas affected. If your property manager suggests a price reduction, please listen. If they say don’t take that person, please don’t take them.
You will see the figures in newspapers for Auction clearance rates dropping back. The hayday of clearance rates with auction clearance rates at 80%+ three weeks ago is now down to 60% as of last week. Prices will come back, but how quickly they recover depends on how fast the economy recovers and that’s a big unknown. The concern is that small businesses that close down wont be in hibernation, they will be gone and so will their employment.
I have a concern that I have talked about in previous newsletters. It is not just tenants that may end up struggling but a lot of homeowners. If you have been thinking about selling in the next six months, perhaps give me a ring, we probably should talk. If you are looking past that to next year, let’s wait and see how things are then.
We have spread the rent roll out more evenly among our team. Your property managers name is at the top of your statement if you are unsure. If you need to call, please use their direct number and if they are not in the office, their phone will be redirected to their mobile.
Alex Ragno 8878 1928
Chantel Rowley 8878 1923
Krystal Marshall 8878 1916
Arielle Farrell 8878 1912
Kristine De Santis and I are more than happy to take your call if you prefer
Kristine De Santis 8878 1914
Stephen Jackson 8878 1913
We will get through this
Ours is a business that has faced every real estate challenge of the last 63 years. Not all agencies have our depth of experience or strength, and we do not expect to see the same competitive landscape or competition by the end of this year.
As a property investor, you are probably the most secure of all the investors in the economy. Cashflow will get flaky at times, and new challenges will come that we haven’t yet thought of, but we will handle them, and we will keep updating you as we go.