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What to do if your tenant has asked you for rent relief?

In these unprecedented times, landlords are facing big changes in the market and many have seen an impact not only on the value of their property, but also on their rental income. The Australian Government is making an effort to provide support to help ease some of the challenges of the current economic climate, however some have fallen into a category that may see them left vulnerable to economic hardship – including landlords. 

Many have seen rents been reduced up to 50% with costs remaining the same without any financial support to make up for the shortage of rental income and landlords  have had to carry the costs. 

A big portion of landlords are mum and dad investors that rely on the rental income to pay the mortgage and other bills and another big proportion of these investors are retirees that rely on rental as income in general.  So, we spoke to Belle Property St George Property Manager, Eric Mastrullo to talk to him about what he advises his clients on how they can best navigate the current situation.

Talk to your tenant

If the tenant is asking for rent relief, ask that your tenant share documentation that proves their circumstances such as a letter of dismissal, medical documentation or a letter that shows that they have been stood down. This helps certify that the tenant is in need of this relief. Also remember this is a very emotional time for all, so approaching your tenants with empathy is also recommended. 

Work with your tenant

Advising your tenant to seek financial help from the various government packages could be a good way to start, if you do not have this information we  developed a detailed information pack for individuals HERE that outlines the different support available. 

Working with your tenant so they meet their rent is important as this is more likely to have a direct impact on your ability to repay the mortgage. At the same time, negotiating an amount that your tenant can afford for the time being is a good decision to keep the tenant in place. Property Manager, Eric, says that landlords should treat every case differently, depending on the tenant’s specific situation.”

Low rent is better than no rent

“Having a reduced rental income is better than having no income at all,” says Eric. There will be a lot of supply of rental properties after COVID-19 so it is best to try and keep your tenant in the property even at a lower rent price than to not have a rent at all. Putting your property on the market means that the prices will be dictated by the supply and demand, which could drive your rental price lower.

Prepare for the next couple of months 

It is best to have a tenant locked in now even if they are not paying full rent, if they have been a good tenant for a long time now it’s very likely that they will start paying their rent once their income has been re-established. Keep in mind that once COVID-19 passes rents will bounce back and hopefully, your tenant will be able to pay the full rent again so at the moment you have to look at what a sustainable rent is for both parties.  

If as a landlord you are facing financial troubles, you have the option to apply for hardship help and use Centrelink as avenues for immediate help. 

But one way to start is shoring up your finances is to shop around to see if you can reduce your monthly bills,  or by renegotiating your home loan.  

If you want to see if there is a better home loan rate available, check uno’s loanScore tool. It’s quick and easy, and you’ll know within minutes if you could be saving money. 

 

This information in this article is general only and does not take into account your individual circumstances. It should not be relied upon to make any financial decisions. uno can’t make a recommendation until we complete an assessment of your requirements and objectives and your financial position. Interest rates, and other product information included in this article, are subject to change at any time at the complete discretion of each lender.

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