In the last four weeks, we’ve seen an increase in stock with a general rolling over of tenants into new properties as their leases expire. Yes, they are looking for value and an increase in amenity. Those who are out and about are primarily those in employment rather than people who are struggling with reductions in wages.
Clearly, when leases are coming up for renewal, the first thing tenants are asking for is a reduction in rent. We are managing these requests with care and consideration around maintaining the tenancy without reducing rents to below-market levels.
We have done an incredible job for our clients in maintaining the percentage of tenancies on lease which is a smidge over 89% at the end of July. The high number of tenancies on leases has provided our clients with much greater security in tenure as well as maintaining rental levels. To put this into context, many agencies only have 50-65% on their tenants on leases, the rest are on month to month leases which allows tenants the opportunity to vacate at any time with 21 days’ notice.
The May REI vacancy rate for Inner Sydney increased from 5.0% in May to 5.8% in June in contrast to Let’s Rent’s vacancy rate being 5.4% and 2.3% respectively. Our vacancy rate for end of July has crept up to 3% which is above the level considered to be a balance between owner and tenant interests which is 2%. We are doing our best to keep it as low as we can in these challenging times.
Let’s Rent
February 1.4%
March 2.3%
April 3.2%
May 5.4%
June 2.3%
July 3.0%
Six month average: 2.4%
REI Vacancy Rate Inner Sydney
January 3.1%
February 2.8%
March 2.5%
April 4.3%
May 5.0%
June 5.8%
Six month average: 3.9%
Take care and stay safe.
Kind regards
Lisa
hello@letsrent.com.au
02 9555 4886
Happy EOFY!
We’ve entered this month on a relatively positive note for property management.
Thankfully we are seeing the rent relief requests and negotiations easing which we are all finding a relief…. I know many of our clients have found these negotiations challenging too so thanks so much for your understanding and patience.
I talked about redundancies last month but no new ones popping up so that is certainly a positive sign for the time being.
The 60 day stop on termination notices expired 13th June so we are now able to issue termination notices for non-payment of rent even in situations where tenants have been Covid affected and been offered rent relief. There is still the requirement to pay rent under the residential tenancies agreement so those tenants who have chosen to pay short or not paid at all can now be taken to tribunal for redress.
As a result, the wait time for mediation at NCAT has pushed out to 6 to 8. We are doing phone hearings which is actually working well. My experience is that members are actually being a bit more sympathetic to landlords and even property managers too!
At Let’s Rent, we have smashed our vacancy rate by nearly 50% to 2.3% this month!
I must congratulate Lochie who heads up leasing and Nik who takes care of our new business. They have been driving the number of inspections and pushing applications through quickly. We really hope to be letting you know next month that vacancy is lower again.
The May REI vacancy rate for Inner Sydney increased as expected and finished up at 5%. Conversely the REI vacancy rate in Outer Sydney declined from 3.1% in April to 2.7% in May. My REI colleagues are from varying geographical areas and the feedback from them is that regional and outer Sydney areas are doing ok. Conversely the vacancy rate close to the city is the highest. Sydney CBD has the highest vacancy by far at 14.8% according to SQM Research.
Let’s Rent
January 1.2%
February 1.4%
March 2.3%
April 3.2%
May 5.4%
June 2.3%
Six month average: 2.6%
REI Vacancy Rate Inner Sydney
December 3.4%
January 3.1%
February 2.8%
March 2.5%
April 4.3%
May 5.0%
Six month average: 3.5%
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 reliability.
Take care and stay safe.
Kind regards
Lisa
hello@letsrent.com.au
02 9555 4886
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.
Let’s Rent
December 1.7%
January 1.2%
February 1.4%
March 2.3%
April 3.2%
May 5.4%
Six month average: 2.5%
REI Vacancy Rate Inner Sydney
November 2.4%
December 3.4%
January 3.1%
February 2.8%
March 2.5%
April 4.3%
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.
Kind regards
Lisa
hello@letsrent.com.au
02 9555 4886
With the release of the new regulation late on Wednesday, we at Let’s Rent been working hard to plan how to best support our tenants and owners.
Here is a link to the Fair Trading website which explains the new regulation together with some flow charts and FAQ’s – https://www.fairtrading.nsw.gov.au/resource-library/publications/coronavirus-covid-19/property/moratorium
Its tough for many people out there right now. Jobs have been lost, hours have been cut, businesses have closed or been severely affected. How do I know this? Because we are speaking with tenants and owners in distress each day.
The government says that tenants in rent arrears and Covid affected cannot be evicted for 6 months; only tenants experiencing a loss in household income of 25% or more can access a rent relief negotiation process; tenants should keep paying rent and landlords should ask their banks for a break on their mortgage or access a 25% waiver or rebate on land tax. All that is true but how do we best navigate negotiations for all concerned?
Honestly, we are finding each tenant and owner situation different. The biggest barrier to progressing discussions right now is the provision of sufficient documentation to qualify tenants for the negotiation process. We get it. Not all employers are providing documentation and Centrelink is extremely backed up so you don’t know the level of financial support you’ll receive. So, we are trying to move ahead where possible with rent deferment and mutual agreements that can be signed off when we do received all of the supporting documentation.
Essentially, we need you to show what your income was previously and what it is now including any government support. For business owners, its the same. If you could complete the Rent Relief Form and upload your supporting docs that would be great. If you’ve already completed your form, you can upload any additional docs or email to admin@letsrent.com.au.
Owners really appreciate if you can contribute what you can to the rent right now. It helps us in negotiations too as well as minimising rental arrears.
Our position is to mediate the best an outcome under the new regulation and its not always going to suit all parties. Owners will offer less than what tenants expect. Tenants will expect more than owners feel they can manage. We need to get to an agreement that both tenant and owner can live with right now.
We’d like to thank you for your patience and understanding. It is very much appreciated and we are so heartened by the positive way in which both tenants and owners have responded to an unprecedented change to all our lives.
We need to find balance, compassion and understanding for each individual, family or household whether tenant or owner. So please, let’s work together.
Kind Regards
Lisa
hello@letsrent.com.au
02 9555 4886
I hope you have all taken a moment to remember today what the ANZAC’s did for our nation and others. We are truly grateful for their sacrifice and efforts.
We are also very grateful for the nations adherence to restrictions and for the affect that has had on new Covid cases. Indications are that we will soon be easing those restrictions which is great news for us all!
As I’m sure you can imagine, we have been working through rent relief requests and resolving where we can. We had 65 tenancies affected at the beginning of the week. We’ve actually received lots more documentation from our tenants this week as information and documentation has flowed through from the JobKeeper and JobSeeker programmes. Businesses are also receiving financial relief through credits on their BAS. I haven’t yet heard of a business owner receiving a grant but I do know some have applied.
Rent Relief
I thought I’d recap on this subject today so that I can give you an update on the rather slippery subject 10 days on from the release of the Regulation. See here if you’d like a refresher –https://www.fairtrading.nsw.gov.au/resource-library/publications/coronavirus-covid-19/property/moratorium
With the increase in tenants being informed of the payments they will receive from Centrelink, we have been able to close off on some rent relief requests as those tenants do not qualify. I even received an email from a tenant yesterday morning, the first one I read, withdrawing their request for rent relief. A great way to start the day!
For those landlords who do pay land tax and the tenant can provide appropriate evidence of a reduction in household income of 25% or more, it is appropriate to apply for the 25% rebate or waiver on land tax. This is effectively what the government is directing us to do. The rebate or waiver must be passed onto the tenant in full. This is actually the only way landlords are being supported in the stimulus package. Example: Landlord pays $4K in land tax per annum and $1K is offered as rebate or waiver to be passed onto a qualifying tenant. Unfortunately the application process is not yet open but we are preparing for this by ensuring we have the supporting documentation. Link here to government information if you’d like to read further – https://www.revenue.nsw.gov.au/news-media-releases/covid-19-tax-relief-measures/covid-19-coronavirus-and-land-tax
The fairest negotiations we have been able to finalise are those where an owner is able to offer a rent abatement which the tenant does not have to pay back together with a deferment of an amount the tenant does have to repay. Example: Rent is $500 per week – landlord offers abatement of $50 per week and tenant defers payment of $50 per week. This would be where there is no land tax rebate available.
We’re finding it difficult to negotiate where a tenant has been earning good money and has been paying a higher than average rent. If they are now receiving JobKeeper of $750 per week they are unable to pay full rent unless they use savings. Those tenants qualify for rent negotiations and are asking for significant reductions in rent which most landlords are not able to provide. Let’s not forget that many owners have been financially affected by Covid too. With these, we are seeking to reach agreement of a combination of abatement and deferment, mostly deferment.
What happens if we can’t reach agreement? Either party can apply to Fair Trading for mediation which is not binding and then if agreement cannot be reached, either party can apply to NCAT (tribunal). In the example above, it would be up to the tenant to apply as they don’t agree or accept what the owners is offering. If the tenancy falls into arrears of more than 14 days, we would likely apply to tribunal and Fair Trading assuming the Fair Trading process would happen first and allow further negotiations to lead to agreement.
We have a case where a tenant has refused to provide documentation in order to demonstrate 25% loss of household income so we have lodged a complaint to Fair Trading. They will require the documentation to be provided in order for them to mediate. If they refuse, the matter will be closed by Fair Trading but we will then have this further refusal to provide as evidence at tribunal. This case is already scheduled for hearing 2nd June as the tenant was already in arrears before the new Regulation commenced.
Parliament Sitting 11th May
The REI (Real Estate Institute) has been working tirelessly to support the interests of landlords and property managers by lobbying government. The NSW Parliament has been called to sit on 11th May and we have been advised by the REI that landlords interests are on the table to be discussed. Principally, the REI’s position is that landlords have been left to cover the cost of rent relief by deferring mortgage payments or simply by using their own savings. We hope they will come to the party with more support for landlords.
If you have any questions or concerns, just let me know. We’re here to help!
Kind Regards
Lisa
hello@letsrent.com.au
02 9555 4886