Let’s Rent Monthly Property Management Update – June 2020
It’s been another big month on the rent relief front with our core rent relief team working hard on ensuring that we have all of the documentation to qualify tenants and subsequently agreeing rent relief arrangements. Mostly we are arranging rent abatements for 2-3 months depending on the tenant’s and owner’s situation. Honestly, its astounding the amount of time it takes to agree each case. Again the biggest hold up is tenants providing appropriate paperwork including evidence of income prior to COVID restrictions, income after, Centrelink statement, separation letter, and if someone is self employed or a sole trader it’s much more complex.
It seems that companies are now in their second phase of decision making around retaining employees and we have seen several redundancies reported to us just this week. As you can imagine, these are in the events and hospitality sector.
The REI (Real Estate Institute) sent out a second survey to their property management membership last week which covered around 65,000 rented properties in the state. The percentage of rent relief request per portfolio remained consistent at 15%. Of the tenancies that qualified for rent relief, 64% were granted a rent reduction. The time period for relief was 25% for 1-2 months, 50% for 3 months and 25% for more than 3 months and up to 6 months. Most property managers expect more rent relief requests to be lodged and we are of the same view.
The NSW government passed another piece of legislation on 14th May which allows Covid affected tenants to apply to tribunal to break their lease with a maximum penalty of 2 weeks rent applied. That means they would pay rent until they return keys and then 2 weeks rent on top of that. They may of course ask for less and depending on the level of hardship, the member may award this. They can only access this option if rent relief negotiations fail or stall.
We are at tribunal next week with a tenant who has historically paid his rent late and is now 41 days in arrears. The application to tribunal was made 11 April and in the past we would have had a hearing within about 2 weeks. He has refused to provide legible documentation to demonstrate his loss of household income due to Covid so we have been unable to negotiate an outcome. We have applied for an eviction so will let you know how that goes.
Some polar opposite results are occurring in the leasing space. Yesterday we did our first open at a three bedroom apartment in Coogee at $1,100 per week. We had 54 enquiries, 20 people through and 3 applications. We rented the property last year at $1,200 per week and had adjusted the pricing in line with the market. We are hoping to secure an increased offer of $1,150 per week. We also took a deposit on a renovated terrace in Paddington at $1,450 per week which had leased at $1,500 per week last year. In the north we secured deposits in about a week on a couple of cracker three bedroom apartments, one at $1,300 per week and another at $1,250 per week. Conversely, we have a number of properties in the Inner West with low numbers through open inspections and offers coming in lower than the asking rent.
As I mentioned last month, the vacancy rate on our portfolio and in the market generally has risen due to properties not coming onto the market until previous tenants have vacated. Don’t forget that we are a month ahead of the REI vacancy rate. For April, the REI vacancy rate was 4.3% versus 2.5% the month prior. Our vacancy rate this month is 5.4% which is not surprising considering we are showing already vacant properties. We are showing all properties four times per week and at different times of the day in order to capture as many potential tenants as possible. In addition, every person that enquires is called to see if we can arrange a private inspection.
Six month average: 2.5%
REI Vacancy Rate Inner Sydney
Six month average: 3.08%
Thank you to those of you who have sent questions through! I really do love to hear your burning property management questions. Don’t forget, we are always happy to check out any investments you may be interested in purchasing and provide a rental appraisal together with feedback on rentability.
Take care and stay safe.