It is no surprise that we would all share the burden of the Covid-19 fall-out both emotionally and financially. Property owners, tenants and property managers are all feeling the pain. Together with  many of our long term clients we have endured rental market down turns in the past and had to deal with the many obstacles that arose. Do you recall back in 2003 when property owners were offering plasma TV's with every 12 month lease and with the launch of a new development a car was offered in a raffle to all new tenants. They were very trying times indeed and the vacancy rates were high and average vacancy periods were greater then 6 weeks. The average home loan interest rate was above 6.5% and rising. The average LVR was 90% meaning higher loan repayments with more lenient lending criteria resulting in landlords that were extremely cash flow sensitive. To make things worse there was a flood of new projects commencing and new properties coming onto the market.

But this time around landlords are in a far better position than back then. Investment loan interest rates are below 2.8%, banks have offered 6 month mortgage repayment holidays which may be extended, the lowering of the LVR to below 80% and more stringent lending criteria has made new landlords less cash flow sensitive. There are less new residential projects commencing and completing in the next 18 months, landlords are more open to offering rent reductions than loosing tenants which is keeping many tenants from moving.

So if we can all work together, be patient and be more flexible with rents and work to address genuine tenants needs then the impact will be greatly reduced for all parties and we will be able to reduce the financial and emotional stress. 

Following is a recent article from realestate.com.au   

Struggling landlords are offering to pay tenants’ utility bills, Netflix subscriptions and even waive up to a month’s rent as a record jump in vacancies turns Sydney into a renter’s paradise.

With an unprecedented 27,000 rental properties sitting empty across the city, landlords are offering the huge perks in the hope of filling their properties quickly and staving off a long and costly vacancy period.

Landlords are dishing out particularly enticing deals in Sydney’s inner suburbs and areas once popular with international students, which have been the worst affected by COVID-19 restrictions and rising unemployment.

A two-bedroom CBD apartment on Elizabeth St is being offered with four weeks free rent, while the landlord of a Kent St unit is promising a $100 per week discount for the first three months.

Other landlord offers include free internet and premium Netflix with a Castle Hill unit on Bracken Fell Cl, along with plenty of other units offered with utility bills and other expenses covered.

Ray White Erskineville head of property management Melinda Fiori said tenants had all the power.

“It is such a great time to be stitching a good deal together,” she said. “There has never been a stronger tenant market that I’ve seen before and this has seen us throw the playbook out the window.”

Property managers and landlords were considering offers they would have ignored in the past, Ms Fiori added.

“We are now working with people who are offering as much as $100 less than the advertised weekly price to try to get a deal over the line.”

Realestate.com.au chief economist Nerida Conisbee said the economic fallout from COVID-19 meant landlords had to be flexible.

“Landlords have to be savvy … anything they can do to separate themselves from the pack can’t hurt,” she said. “It is better to get a tenant to sign at a reduced rate than to not have one at all.”

Ms Conisbee said the rental market was in a holding pattern that would remain until the economy started to recover.

“Apartments near universities will not see any recovery until international students can enter Australia, which is a huge unknown at the moment,” she said.

Potts Point renter James Rogers welcomed the landlord incentives, but said perks that put more money in his back pocket were more attractive.

“If landlords are offering to cover my bills or offer a discounted rate for the entire lease, that will certainly make the property far more appealing to me, than two weeks rent free,” he said.

The trend follows an ANZ/CoreLogic housing affordability report revealing a 2.1 per cent reduction in rental values for units and 0.7 per cent decline for houses in Sydney.

The inner city has been hardest hit with the CBD recording a 6.9 per cent decline in values, while Millers Point dropped 6.8 per cent.