Some investment property landlords are also being squeezed as tenants decide to move out to take advantage of cheaper properties.
Landlords are under pressure to retain tenants as rental prices dip.Peter Rae
Landlord Mark,who requested his surname name not be revealed to protect his financial privacy,adheres to a rule that it is better to lower rent than to let a tenant go.
“It’s better to keep someone in a property now,rather than waiting months without rent and hoping to get someone in at a higher price,” he said.
In September,he cut the rent on one of his investment properties to ensure he secured a good tenant. He’s now negotiating the price with the tenant of another property for a longer-term deal.
“With this property,there are similar apartments in the building offering lower rent. I’m trying to find a price that encourages my tenant to stay rather than moving.
“A few stubborn landlords haven’t reduced rents and have had empty apartments for months. Some money is better than none,” he said.
According to the Real Estate Institute of Australia,December quarter Consumer Price Index figures show that the rental market started to recover from the full impact of COVID-19.
However,rents still increased only 0.1 per cent in the period,following two quarters of of declines. Overall,rent prices declined 1.3 per cent for the year.
Jo Natoli,from the Rental Specialists,offers the following tips for landlords to help keep existing tenants happy.
When experiencing difficulties making mortgage payments,landlords should always contact their lender;most still have assistance packages available. Alternatively,they should seek the services of a mortgage broker or another loan provider to get a better interest rate.
If you are forced to cut the rent,Natoli says “it is better to have 100 per cent of something than 100 per cent of nothing.“
Major points to consider when a tenant requests a rent reduction include:
Landlord’s insurance is good,however,it does little to help an investment property owner in financial difficulties.
The insurance is designed as a safety net if the landlord suffers an unexpected loss,such as if the property floods and becomes uninhabitable and the landlord is unable to collect rent.
It won’t cover a situation where the market has dropped and a tenant requests a rental reduction and the landlord suffers financial loss as a result.
Good landlord’s insurance should cover: