Looks can be deceiving at times. There are a lot of potential tenants going through open inspections, but many are dual applying because it’s a very competitive market at the moment and they’ve got choice. There are unprecedented vacancies across the board at the moment, which is unchartered territory for many landlords. Some owners aren’t prepared or budgeted for vacancy periods so this can be quite a difficult situation to confront.
It doesn’t seem that long ago people were turning up with a few months’ worth of rent ready to go just so they could secure a property. Now they see something for $780 a week and try to offer $730.
Tenants have the upper hand and more are asking for rent reductions. They may have been living somewhere for a couple of years and have been good tenants, but then they see a vacant apartment in their building being advertised for $50 a week less than they’re paying. They then might say ‘we’ve been here for two years, we’re good tenants, can you reduce the rent to match what new tenants are getting elsewhere? Otherwise we’ll leave’.
They know they’re overpaying and you can’t blame them. They could move into newer properties for cheaper.
Owners in this market should prioritise keeping good tenants over incremental rent rises. Even if you have to drop the rent by $20 or $30 a week, do it. It’s much cheaper than having your property vacant for weeks or even months.
Dropping the rent $20 a week may mean $1000 less a year in rental income. But if your property is vacant for a month, based on Green Square rents, that’s nearly double the loss and then you have to find new tenants who may or may not be good and start all over again.
We have a strong relationship with owners but also with tenants. At times like this, with a tough market, that’s important. If they feel looked after they are less likely to pack up and go. And they won’t be as ruthless about demanding rent reductions if they feel like they’ve been looked after for a long time.
Published by Trevor Back
Principal, Raine & Horne Green Square
Phone: 0428 006 900