Celia Burbery, Auckland Property Management Property Management General Manager shares the complex effect that COVID-19 has had on Landlords.
So exactly how is COVID-19 really effecting Landlords?
I was interested in results from a recent investor survey by NZPIF which stated that 53% of those surveyed had no change to their income during lockdown, however that leaves 47% who did! Those on the outside of the property investment industry may well think that income change would be solely due to loss of rent however it can be much more complex than that. Landlords are everyday people who like many others are facing financial difficulties of their own in many forms because of COVID-19. Many landlords have complex portfolios and were affected by multiple different losses of income including share portfolios, commercial rental income, residential rental income, plus they have personal mortgages, job losses or wage reductions just like others effected.
At Auckland Property Management, residential losses were varied as:
- 90% of tenants remained in place during lockdown and continued to pay their rent as normal.
*10% of tenants asked for a rent reduction which were individually assessed and consulted with landlords.
- 5% of properties were stuck vacant during lockdown.
- 4% of tenants were granted a reduced rent or a deferred by their landlord with a small proportion of those deciding to move out of the property.
- 2% of tenants stopped paying rent altogether for a short period of time.
The impact of COVID-19 on the property industry is still going to arise over the next 6 months as tenants and landlords face continued changes to their incomes and financial positions.
The government has been very clear in new COVID-19 legislation that there was to be no undue pressure placed on tenants for rent and we followed that instruction. We continue to follow arrears procedures with compassion as tenants were still accountable for rent payments and repayments, however termination for rent arrears was increased to 60 days in order to reduce emotional and financial pressure. Rent increases were frozen but increase notices can still be issued provided the increase takes effect after 25 September 2020 at the end of the initial six month freeze period unless the legislation is extended. An extension for this legislation has not yet been decided so acting now may be premature.
Considering the view from the government, including commentary from other governing bodies such as Tenancy Tribunal, the question of whether landlords should increase rents given the economic climate, is one leading to a very personal decision and needs to be measured based on the potential risks/ benefits.
We are continuing to support our landlords and tenants as the industry slowly returns to some normalcy. Our property managers are flat out resuming inspections including the backlog of those that were forbidden during lockdown plus those normally due now. As is always the case, storms don’t last forever.
General Manager – Property Management
Auckland Property Management
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