As the initial shock has passed and we find ourselves entering the fourth week of lockdown, we are all wondering what the future will look like.  Our industry wonders what will happen to rents, house prices and supply and demand of houses for rent and for sale. We definitely have some way to go yet to ensure New Zealand is virus free.

As we all know there were some quick law changes announced as a result of COVID-19. 

The Minister of Finance announced on 23 March 2020, a freeze of rent increases and protections against tenancy terminations. This has been applied as law through the COVID-19 Response (Urgent Management Measures) Amendment Act.

Have we seen an increase in rent arrears?

Since the lockdown started, we have had a few tenants contact us having lost their job and worried they cannot afford the rent.  Initially some were unaware of how to claim the Government subsidy, thinking they would be left high and dry.  Others heard there was going to be a rent freeze, misunderstanding the Government had only stopped landlords from increasing rents for the next six months rather than entirely stopping rent payments.  This was further exacerbated when it was announced the banks where offering people mortgage holidays, tenants thought why should they pay rent if the landlord is not paying their mortgage?  Unfortunately, the mortgage holidays only apply to home owners and not investors – whether this is fair or not, is a discussion for another day.  

Dealing with rent arrears is not an easy answer…

We have been flat out spending most of our time talking with tenants, dealing with each case individually as we try and help everyone, tenants and owners alike, as best we can.  Whether it be assisting tenants with where to seek help, setting up repayment plans or just helping them to understand any misconceptions given by the media.  With the Government changing the rules for the next three months we can no longer apply for termination unless the tenants is 60 days or more in arrears.  Luckily, we haven’t had any tenants stick their head in the sand and avoid communication.  It’s times like these the good relationship formed at the start of the tenancy really has value.

Our aim is to come out of this situation with the tenant’s home and the owner’s investment still secure.

So, what has happened to tenants who were due to vacate?

With the new legislation, tenants who had given notice to vacate could revoke that notice and continue with the tenancy, in these instances we have offered an extension of the fixed term.  Similarly, tenants who had been asked to vacate by the owner have been offered extensions.  So far, most situations have been amicably resolved for the short term.

Unfortunately, we do have some vacant properties which remain vacant until the lockdown is lifted and we are able to move around again.

Has there been many maintenance issues?

Luckily, we haven’t had many at all as under Level 4 lockdown we can only attend to problems that if left unattended would jeopardise the tenant’s health and safety. 

Will the Government delay the new RTA proposals?

Unfortunately, not, our Managing Director, Hamish Wilson, was allocated a 15 minute time slot yesterday debating the finer points of the changes with the select committee via Zoom.  His feelings about it all…”it’s a little bit bemusing that in a state of emergency and global pandemic that the Govt seem hellbent on forcing these changes through, however we have done all we can in the process that is allowed for,…hopefully the select committee took on board some of the points that we raised as these come with decades of experience…”.

Where to from here?

Until we know what the next stage looks like after Level 4 is lifted, it is hard for businesses to plan how they will operate.

We are fortunate our business has robust policies and procedures in place, we keep up-to-date with the latest technology allowing us to work remotely and look to the future.

Tenancy inductions could be done remotely with digital signatures being available on the agreements we use.  Pre lockdown, we trialled video walk throughs which could be rolled out as the norm allowing people to view and check properties to avoid group viewings before moving in.

Routine inspections may be done externally until it is deemed safe to enter tenanted properties again.  We may need to rely more on tenants to provide video walkthroughs via facetime or other apps and be prompted by us on what to look for maintenance wise. The software we use have developed a program for tenants to assist us in adding photos to our reports.

A strong team wins...

We are working hard to support all our team throughout this disruptive time.  Like you, we know how important it is to have a great team and we want to ensure we retain them.  Along with the general property management tasks, our team have opted to use this time to increase their skills as they study towards gaining the NZ Certificate in Residential Property Management Level 4. We are aiming to come back fully prepared to tackle the “new norm” and be leaders in our field.

I think as Cantabrians we are reasonably well weathered in this environment compared to other parts of the country.  We survived the endless Earthquakes where similar problems occurred with rent arrears, limited supply and increased demand on rental properties plus all the emotion and stress we had to handle.  Many Cantabs I have spoken to agree with me that they’d rather now than then.

Rents in Christchurch haven’t escalated as phenomenally as other centres so there is less room for them to fall.  I think we will definitely see a flattening of rents or perhaps, at the most, a 5% decrease.  Our supply versus demand has been fairly even for a while now so we should be able to keep vacancy rates steady. 

As ever we are here to help and more than happy to answer any questions you may have.  Keep safe, stay at home and together we will get through this.