Since COVID-19 became a Pandemic on March 12 we have been trying to keep the property management sector informed and up to date as news is related and things change. As you know it’s been a fast moving beast that has effected Property Management in a number of ways. The sector has had to react quickly and adapt for the changing requirements of the job.
During the past three weeks we written a number of blogs and provided a number of free downloads as problems have come up. We have also answered a number of questions from Property Managers across the country and for our coaching groups.
We thought it might be valuable to the entire sector to see some of these questions and the issues that they have raised. Below are the Top 5 Frequently Asked Questions from the past three weeks. To answer these questions we did a brief interview with HTA Associate and Property Management Consultant David Turnout.
Q1: What can I do about tenants who have lost their income, are stressed out, and can’t pay their rent?
David: It’s important to carry out any discussion around rent arrears with a tenant in a calm, compassionate and professional manner. Any requests from the tenant around rent payments should be made in writing and where possible backed up with some relevant documentation. The tenant should also check with Work and Income as they may find that they receive financial assistance to pay rent arrears. After the Property Manager has facilitated an agreement with both the tenant and landlord, a written agreement should be formed with clear details around timelines for repayment and amounts needed to be paid in order to remedy the rent arrears.
Q2: If we give rent holidays then we don’t make any fees and still have to manage the property. What should we do about this?
David: A Property Management’s business income is directly related to how much rent is received. Essentially when less rent is received, there is less income and cash flow to pay staff and run a business. Although a rent holiday will mean that the tenant eventually pays the rent arrears, Property Management businesses will need to carefully monitor this area so that they can forecast future income / cash flow accurately. I would recommend obtaining further advice from your accountant with regard to this question.
Q3: Can I evict tenants during the lockdown?
David: Regardless of when a termination notice was served, tenancies can not be terminated during the lockdown period. A tenancy can be terminated if both parties agree, or under some special circumstances. Tenants have the ability to revoke termination notices that they have already been given as they may need to stay in the tenancy during the lockdown period. Tenants will still be able to terminate their tenancy as normal but only if they wish to. As mentioned there are special but limited circumstances where landlords can apply to the Tenancy Tribunal to terminate a tenancy which we have outlined on our website. As there is a maximum fine of $6,500 for any landlord who takes steps to terminate a tenancy unlawfully, we would recommend seeking advice before progressing with a Tenancy Tribunal application.
Q4: Can new tenants move in during the lockdown?
David: Yes, but only in extreme circumstances. The level 4 alert rules were created to reduce movement between properties for the lock down period. If a property manager were to rent out a vacant property during level 4, they would have to find a way to do so without in person contact with the tenant (e.g a property manager could use an existing virtual tour of a vacant property to replace a viewing ). Tenants have kept their existing rights under the RTA and may still be able to move into a new rental property. However, they must follow Ministry of Health guidelines and follow the Alert System rules when moving. Here’s some more information from the Tenancy Services website:
☛ If parties need to sign a tenancy agreement, this should be done digitally.
☛ If keys need to be transferred, then extreme care must be taken. Property managers are not classified as an essential service so they cannot go into offices to pick up keys during alert level Transfer could therefore only occur if there are keys available to them at their homes. Physical distancing must be maintained and keys should be sanitised.
☛ Tenants can only move in a private vehicle with only members of their own household. They cannot hire a moving service during this time.
Q5: What maintenance can we do and how do we find tradies willing to do it?
David: If the maintenance issue falls under the essential services, then an essential services company will be able to perform the repair. Tradespeople are able to conduct maintenance that is essential to the necessities of life or critical to safety. This includes electricians, plumbers and builders so your existing contractors should be your first port of call to see if they are approved to operate over the lockdown period.