Implications of COVID-19 to Residential Landlords

Posted by Auckland Property Management Ltd on April 13, 2020 | News, Property Management, Video Blog

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Business Development Manager Toni Heath discusses the implications that the COVID-19 pandemic is having on landlords.

Auckland Property Management is aware that landlords have concerns as we work through the current global coronavirus COVID-19 pandemic.  It is our intention to continue working for our landlords (albeit remotely) by reducing risks associated with the current national self-isolation period.

 

Since talking to property owners over the past few days, we have answered queries relating to the following areas:

 

Inspections

Most insurance policies require a regular inspection to be completed on a rental property, something that during alert level 4 is not possible.

However our property managers are working with tenants, and have tasked those that feel comfortable in doing so to do a self-inspection video.

This will be a short video guided by the property manager which will focus on wet areas such as showers, sinks and cupboards. This is not a perfect replacement but shows an intention to meet obligations, there will be no inspection fee charged to landlords during this time.

This method may potentially reduce backlog when we return to a lower alert level status and property managers are free to leave their homes.

 

Rental Income

On 23rd March 2020, in response to COVID-19, the Prime Minister announced a freeze on residential rent increases and increased protection for tenants from having tenancies terminated.

The rent freeze applies for an initial period of 6 months and protection from termination for an initial period of 3 months.

There is a strong possibility that some tenants may fall into arrears as household incomes are reduced or even lost during the shutdown.

Our Property Managers are working very closely with tenants to minimise potential loss of rent for owners and to ensure tenants are supported in what is a stressful time for everyone.

We have had a number of feel good news stories come through such as:

  • Tenants have asked us to let Owners know of their situations so Owners aren’t worried about them.
  • Some Owners have reached out to us to reduce tenant’s rent.
  • An Owner has put a hold on rent at a property and the tenant has agreed to increase rent by $50 once they start working again to pay off the arrears.
  • Some tenants have qualified for the wage subsidy from the government allowing them to continue with their rent payments

If a tenant falls into arrears we will give them a call. This is a discussion coming from a place of concern for the tenant and their wellbeing so will determine our next move whether it is offering assistance links for hardships, negotiating possible rent reductions, or possible repayment plans with owners’ agreement.

If needed, we will issue a 14 day notice for record keeping purposes and these notices have been amended in light of the unprecedented circumstances to include specific directions during the pandemic.

Get in touch with your Property Manager if you would like to discuss this process further.

 

Essential Services

Accommodation has been listed on the government website for essential services, however this has been defined as any entity that provides accommodation services for essential workers, tenants requiring isolation / quarantine and emergency housing.

Please note that property managers are not classified as an essential service at level 4 of the Alert System.

For more information on essential services please click here.

 

Vacant Properties

For those rental properties that we currently have listed there may be an option to rent these out under the essential services guideline above.  Those currently vacant and fully furnished will most likely attract higher interest.

Under alert level 4 people are not permitted to have contact with others outside their homes, which means we cannot hold a viewing as we would normally do.

However on most of our vacant properties we do have a marketing video listed so a potential tenant can do a walk-through, followed by a video call with the property manager to assess suitability for the property and answer any questions the potential tenants may have.

Normal tenant screening will continue (credit and reference checks) and if successful, tenants will digitally sign a tenancy agreement with a sight unseen clause.

To protect the landlord’s interest we are not looking at doing any tenancy agreements less than 3 months.

 

Moving and the Ministry of Housing and Urban Development Guidelines

Moving rental properties is not prohibited under the COVID-19 Response (Urgent Management Measures) Amendment Act (the new law passed amending the Residential Tenancies Act).

If parties must move in extreme circumstances they must exercise extreme caution and follow Ministry of Health guidelines and follow the Alert System when moving.

The measures under the new legislation are designed to reduce movement between properties at this time wherever possible for the 3-month period.

Tenants retain their existing rights under the Act and may still be able to move into a new rental property if they need to but must follow Ministry of Health guidelines and follow the Alert System when moving.

There may be situations where moving into a new rental property is absolutely essential. For example:

  • A New Zealander returning to the country may need to begin a new tenancy.
  • Family violence may create an essential need to move.
  • A tenants’ current rental property may become uninhabitable e.g. a catastrophic plumbing leak.

During alert level 4

Moves can occur in very extreme circumstances and extreme care must be taken not to violate any Alert Level 4 rules.

For example, if a New Zealander might be returning home from overseas, the landlord or property manager might be working from home and have access to keys at their home office. The tenant might pick the sanitised keys up in their own vehicle and go straight to the new premises.

Tenants cannot hire a moving service during this time.

During alert level 3

Similarly, moves at level 3 can only occur in very exceptional circumstances. All parties must take extreme care.

Some guidance on specific scenarios as follows:

  • If parties need to sign a tenancy agreement, this should be done digitally.
  • If keys need to be transferred, then extreme care must be taken. Property managers are not classified as an essential service so they cannot go into offices to pick up keys during alert level 4. Transfer could therefore only occur if there are keys available to them at their homes.
  • If any tenants are moving then they would need to do so in a private vehicle with only members of their own household. They can’t hire a moving service during this time.

Please refer to the following website link for information on the Alert Levels: https://covid19.govt.nz/government-actions/covid-19-alert-level/

 

As you may already be aware, there are a set of questions and answers available on the Ministry of Housing and Urban Development website that may assist with the queries you have about more detailed scenarios, you can view the PDF document here.

 

If you have any questions about how the COVID-19 pandemic implications, then feel free to get in touch with us on the below online form and one of our team will contact you.

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