Navigating Rental Agreements
A good rental agreement can save time, money and heartache for both the landlord and tenant, but they don’t just happen. Crafting a solid agreement that cares for both parties is much more than just a copy-paste away, and when disagreements happen, you’ll need an expert negotiator to achieve the best outcome for everyone involved.
This time of coronavirus comes with added pressure as new regulations around accommodating for financial hardship and other concerns make it even more important to have a third party on hand to help who is knowledgeable about the requirements.
Love & Co. are experts at creating rental agreements that are fair and appropriate. Here’s why negotiation is such an important area for a real estate agency to make one of their specialities in these times.
Keeping it on even ground
Negotiation isn’t just important in hostage situations and big business takeovers – good negotiation skills can make the difference between a miserable tenancy period and a breezy agreement that benefits both parties.
One of the major concerns for both tenants and landlords in the current environment is the way isolation is affecting personal financial situations. Some tenants are having difficulty meeting their rent, but there are owners who are also struggling.
Negotiating rent reviews in times of hardship is extremely difficult, with humanitarian but also legal concerns coming into play. The government regulations can be confusing for people who lack the experience to interpret the laws as they apply to their personal situation.
The government announced a six-month moratorium on evictions due to lack of payment, as well as rent increases. However, most landlords can’t afford six months without rent, even if the tenant is genuinely in need. The key is obviously to encourage tenants to pay what they can, for landlords to explore other avenues such as insurance to get by, and for both parties to access government relief packages wherever possible to get their rent paid.
In his address confirming the moratorium, Prime Minister Scott Morrison acknowledged that the situation was not just as easy as a rent-free six months,
“This is obviously a complicated issue because you’ve got a tenant, you’ve got a landlord, you’ve got creditors and all of those issues and you need to solve for the entire chain that’s there”, Morrison said.
Fair terms for tenants
So, what factors need to come into play to ensure that tenants are fairly treated?
Firstly, there is plenty of anecdotal evidence that many landlords are first and foremost concerned with the well-being of their tenants. Although some may be looking at the situation purely from a financial viewpoint, real people are being affected by the pandemic and are struggling to access funds. An ideal outcome has everyone safe and housed, and doing their best to meet their obligations.
Having tenants who have lost employment and are struggling to make rent payments is nothing new to experienced property managers. Of course, the concerns around employment is now happening on an unprecedented scale, but it’s still something that most property managers have dealt with and know how to negotiate.
Communication and honesty is absolutely vital to creating an equitable agreement. Tenants need to continue to pay as much of their rent as they are financially able to manage, and access any available government support through the appropriate channels to have something to put towards their rent.
A tenant who is experiencing genuine hardship needs to be supported as much as possible and has the right to remain in their housing as long as they are genuine about that hardship. A rental agent will need to make sure they are considered and listened to, and that they have a minimum of disruptions and additional stress as they navigate these hard situations
Fair terms for landlords
However, the rights of landlords need to also be upheld. While many tenants are experiencing genuine hardship, there are those who would attempt to take advantage of the system, and view the moratorium as an excuse to stop paying rent.
Even with the genuine loss of employment for tenants, many owners are experiencing the same financial hardships. Costly repairs and lack of rental income will be extremely difficult for many landlords to accommodate, and finding tenants is an even more difficult proposition. There are also people relying on incoming rent to fund their retirement, who can’t afford to lose that income.
Tenants claiming hardship will need to be able to demonstrate loss of income. Then, a skilled rental agent will need to negotiate what they can pay, while directing them to different forms of government relief. There is also some financial relief available to landlords depending on their situation, and an experienced agent can help point you in the right direction.
Landlords have two main options when financial hardship has been proven – to reduce rent, or to defer payments. Either option has risks – a rental reduction obviously means less money is received, and it’s important to specify the length of the term that amount will apply. It’s worth noting that accepting a reduced rent might make an owner ineligible to claim landlord’s insurance, so that will need to be investigated prior to exploring other payment avenues.
Deferring rental payments means the full amount should theoretically be paid eventually, but it’s difficult to know what will happen. Tenants might find themselves unable to pay the debt or fall into even greater hardship. In this case, the owner might not receive anything.
Master negotiators.
Being a property manager is more than just inspections. Rental agreements and negotiating fair terms for both owners and tenants is an extremely difficult but important job. In these times, it becomes even more necessary to have someone who understands the regulations, who takes the time to learn about special considerations such as government relief packages and how to get the most out of owners’ insurance, and who is personable and professional. The team at Love & Co. make negotiating a specialty, and are well equipped with the skills and experience to help guide tenants and landlords through this uncertain period.
Don’t try to wade through these difficult times by yourself – get some professionals on your side, and contact the team at Love & Co. today.