The Government has put a temporary freeze on rent increases for residential properties. This was introduced in a bid to provide relief to renters facing reduced working hours or job losses as a result of the coronavirus downturn.
What can you do now?
1. Identify risks within your portfolio
It has never been a better time than now to identify the factors that can cause volatility in your property returns. This will help you picture your worst-case scenario, which realistically maybe that some rents are going to be missed. This means that you may end up with less money for a few months.
Good idea to identify which industry your tenants work in and see if there are any possible issues you can predict based on this. Rent payments from WINZ are likely to be safe and consistent. But other tenants are might be at higher risk of losing their jobs and having their work hours cut down. Keep the lines of communications open with your tenants. Talk to them today.
2. Increase your cash reserves
Do you have enough emergency funds to see you through of things turn bad? Are you able to support 1-2 months of missed rent?
Talk to your mortgage broker or your bank today to understand how you can achieve a cash buffer and go through your options. Can you upgrade your loan to a flexible loan with a revolving credit facility, so you can have access to credit when you need it? If you're paying principal and interest, are you able to change to interest-only loan to free up some cash to help you through?
The Government has announced a six-month home loan deferral scheme (mortgage holiday scheme) for homeowners whose income has been impacted by Covid-19. This will see eligible applicants stop the principal payments temporarily and have their interest added to their mortgage.
3. Practice compassion
Property values may change and jump and down. But people will still need a place to live.
Be proactive and send a message to your tenants today telling them to contact you as soon as the things get tight (and not wait until they've racked up weeks of rent arrears), so you sit down and discuss how you can help.
If your tenant loses their job, work with them to come up with a solution that works for both you and them. Negotiate a payment plan of partial rent payments if you can. Make sure you get everything in writing.
Suggest outside assistance.
- There might be financial support from the Government's Wage Subsidy scheme available to eligible workers.
- Budgeting services may provide some help.
- WINZ may be able to assist with emergency payments.
If you're not registered as an accommodation provider, you can use myRent to help you collect payments from WINZ on your behalf.
- There might be an opportunity turning to the bank for them to get a short-term loan.
- Consider allowing tenants to sublet to paying boarders and flatmates to provide some relief.
4. Safety first
Social Distancing will be the term of 2020. You usually have to conduct property inspections every 3-4 months depending on your insurer.
Make sure you refer to the right Alert Level guidelines to understand what you can and cannot do.
5. Stay compliant
The COVID-19 crisis doesn't change any of your obligations as a landlord. Keep checking Government announcements that may impact some of your rights. If you need any general legal advice and information about renting in NZ, check out www.tenancy.govt.nz. Tenancy Services has FAQs concerning COVID-19 on their website which may be useful.
Different Alert Levels may change to your rights and obligations as a landlord refer to our COVID-19 (Coronavirus) Resource Centre to understand what you can and cannot do at different levels.
6. Don't delay advertising
If your tenant is leaving, make sure you don't delay advertising. Give yourself as much time as you can to rent the property out. Make sure you use good photos, make the property as impressive as possible to increase your chances of securing a tenant in the shortest time.
7. Take care of yourself
Make sure you look after yourself, your body, your family. Keep your mind healthy and try not to get overwhelmed by the enormous amount of information coming at us from all direction, some of which is fake. Turn off social media if you need, rely on government updates, WHO, NZPIF, and credible news sources. Turning off unnecessary noise will help you stay up-to-date, alert and help you make better decisions.
We will do our best to keep you updated with the most relevant data and help you prepare for the tougher times ahead.
The information contained in this article is exclusively for promotional purposes. It does not in any way constitute legal advice and should not be relied upon as the basis for any legal action or contractual dealings. The information is not and does not attempt to be, a comprehensive account of the relevant law in New Zealand. If you require legal advice, you should seek independent legal counsel. myRent.co.nz does not accept any liability that may arise from the use of this information.