How to be a good landlord during coronavirus
Many renters are experiencing financial stress as a result of the coronavirus (COVID-19) pandemic. But times are tough for everyone – landlords included. Unpaid or discounted rent can put you, the property owner, in a tricky position.
How can you negotiate with renters and help them overcome their financial challenges while staying afloat yourself? Here are five ways to be a good landlord during the COVID-19 crisis.
1. Put yourself in a renter’s shoes
Renters may not have the same sense of security as a homeowner. It’s essential that you, as a landlord, remember what it was like to be a renter, to be face-to-face with the prospect of losing your home.
Be understanding of your tenants’ circumstances. If they approach you asking for a discount or payment deferral, be sure to listen to their reasoning and show compassion when you respond. Playing hardball could be short-sighted. If your tenants have a good track record of paying rent on time and caring for your property, now’s the time to show your appreciation and earn their long-term loyalty.
2. Know your own situation
Before you can negotiate with your tenants, you need to know where you stand. What you can offer renters will depend on your own circumstances, specifically your financial situation. If, for example, you are one of the 30 per cent of Australians that own their rental property outright, you’ll be able to give your tenants a little more leeway.
If you’ve still got a hefty mortgage on your investment property, you may have to take a different approach. Speak with your bank and find out if you can defer your loan repayments. Be aware that interest will continue to accrue on the principal if you don’t make repayments over a period, so you’ll end up paying more in the long run.
Once you know whether or not deferring repayments is an option – and what you can and cannot afford – you can begin negotiations.
3. Be flexible when negotiating
When it comes to negotiating, there has to be give and take from both sides. It’s about reaching a compromise that benefits both parties involved, and that might mean thinking outside of the box. For example, you might offer tenants a short-term rent reprieve in exchange for a guarantee that they will renew or extend their lease when things return to normal.
Here are a few negotiations tips to keep you on the right track:
- If your tenants have approached you, understand that they are likely enduring a high level of stress. Allow them to speak first.
- You can ask tenants to provide evidence of financial hardship but do be conscious of privacy concerns.
- Know your options. You can offer either rent reduction, payment deferral, or some combination of the two. If you provide a deferral, your tenants may not be able to pay the accumulated debt.
- Be diligent in your record-keeping, taking note of every phone call and email. For your peace of mind, it may be best to formally explain the agreement in writing.
- Put a time limit on the agreement and review your tenant’s financial situation periodically.
4. Encourage continued communication
It’s vital that landlords and property managers keep the lines of communication open during this challenging time – even after an agreement has been reached.
If your tenants haven’t approached you asking for rental relief, you might like to check their tenancy application to see which industry they work in. If it’s travel, retail, hospitality, or another hard-hit sector, you might like to reach out and ask how they’re doing.
5. Find out what you and your tenants are entitled to
State governments have introduced rental support packages designed to soften the economic impact of the virus. Some of these packages include things like one-off rental grants for tenants and land tax exemptions for landlords.
Take advantage of applicable support measures and be sure that your tenants are doing the same.
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