How should I negotiate with my tenant?

If you are a landlord I’m guessing you would have been expecting a call from your agent about your tenant and how COVID-19 has affected their income.

This call may or may not happen however it’s best to be prepared.

Here are some requests I have seen from our customers

• Tenants asking for a 100% rent relief until further notice
• Tenants asking for any% discount on their rent for a known period
• Tenants asking to defer their rent payments

Here are some things you can do

Ask for evidence

If your tenant is claiming that they have lost their job or have had their income reduced, then I think it’s only fair to ask for evidence. Usually your managing agent should ask for this any. Any form of letter or a recent payslip showing the reduced income. Some tenants will try to use this time to ask for rental relief when they really don’t need it. Also the government is assisting those impacted with JobSeeker and JobKeeper payments, so its important to ask the tenant more questions.

Negotiate terms

When negotiating I will always ask for what might seem reasonable to other side knowing that they will come back with a counteroffer. Usually the counteroffer is what I wanted in the first place, so it’s a win win. I wouldn’t agree to the tenants first offer. I would consider their offer and then get creative on how you can make the offer work for you. Things like reducing the rent now, but the tenant pays the balance back within 6 months, or you extend the lease for another 12 months and agree to increase the rent at the start of the new lease.

You cannot evict your tenant by law

Tenants cannot be evicted if they are in rental arrears because of being financially disadvantaged by COVID-19. There is an interim 60 day stop on evictions. After 60 days the tenant and the landlord will need to enter negotiations. This will be followed by restrictions in place for 6 months for rental arrears evictions for those financially disadvantaged by COVID-19.

What if you depend on the rental income to pay your mortgage?

All the major banks and most lenders are offering relief packages for those affected by COVID-19. Most lenders will automatically defer your mortgage repayment for 3 months initially and then review again for another 3 months.

You can refer to my previous blog for more information.