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First Covid-19 rent reduction request received

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  • First Covid-19 rent reduction request received

    Well I knew it was coming, especially now or at least in part due to the media having put forth the suggestion in many news items suggesting a rent reduction request to your landlord, may be in order in light of these new circumstances upon us.

    I received recently what could be the first of many rent reduction requests. Hopefully not.

    Case by case to be considered, however its a balance, dependent on ones own individual sufferance as a landlord not by any means immune to the effects of Corona and personal circumstances that go beyond that.

    In my tenants situation, it is genuine and he is more affected than most others as he is directly involved in the tourism industry which has now come to a grinding halt.

    Granted that rent generally is the single largest expense in a tenants day to day life , but why exclude from the expense equation a discount request from other necessary expense factors such as power, water, food etc?

    The media focus and centering , almost always toward the landlord as the goto fall-guy is a worn out bias that needs to be curtailed.

    Anyone else received a request and what are your general thoughts?

  • #2
    Insist that they clean the carpet professionally when they move out due to rent arrears.
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    • #3
      So bash the crap out of landlords for the last 6 years and now please sir bend over and take a hit for us?
      Plus the biggest theft of private property still being forced through the law sham of a process.
      Perhaps rent will be reduced if the draconian new laws are abandoned?
      Tenants call your MP and tell them to stuff their virtue signalling.
      The three most harmful addictions are heroin, carbohydrates and a monthly salary - Fred Wilson.

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      • #4
        Asking for a rent reduction should not be the first thing tenants do in hard times. Tenants should first look to family, applying for the Accommodation Supplement and TAS, taking in a flatmate, offering to do some work for landlords, friends, family to top up income.

        Many employers are being funded to pay staff for 3 months, maybe not at full pay levels but not too bad.

        Rent reductions may happen but landlords won't know full details of income and assets whereas applications for government assistance will have to disclose. Pay from this week's $12.1B, well the parts of it for actual working people, are going to be based on trust but with penalties if later found to be wrong info. Landlords have neither full knowledge or comeback later.

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        • #5
          I will tell all my tenants that they should head down to countdown and request a discount beyond normal specials as they need food and they have lost their job.

          I will match any discount offered

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          • #6
            I will match the discount offered by the council on my monthly rates payment. Also that offered by my poor struggling Australian bank. How much of the tax on the rent will the Guvmnt be offering?
            The three most harmful addictions are heroin, carbohydrates and a monthly salary - Fred Wilson.

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            • #7
              Tenant has said he does believe he will be entitled to government help on loss of his 'tourist business' self employment income, but it may be some time till that assistance kicks in.
              As someone suggested here "can he offer to carry out work on the property" for cash, is a good idea, but he's not practical minded in that direction.

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              • #8
                What is the preferred action to be taken by a tenant who knows that they will not be able to meet rent obligations long term due to lost income? If you're offended when they ask for a discount would a 21 day termination notice or, in case of fixed tenancy, application to TT for early termination be better?

                The government's Covid 19 rescue package is $14.65/hr per full time worker ($585/wk) before tax. Accommodation supplement for a couple in that situation is around $80/wk. Tack on a kid or two and there's little chance a family would be able to pay full market rent for long.
                Last edited by Learning; 22-03-2020, 10:17 AM.

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                • #9
                  If I drop the rent $100pw immediately - will I have to wait 12months before it can be returned to normal?
                  Or would it be better to leave rent as is - but repay $100pw?
                  The three most harmful addictions are heroin, carbohydrates and a monthly salary - Fred Wilson.

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                  • #10
                    Well staying at home and not being able to eat out, go anywhere or need new clothes probably means his expenses will be down. Power might be up in winter if he’s not going out. I would be inclined to ask him to make a budget of his expenses and income including government support. Then ask if he can ask for help from parents or family or sell an asset he doesn’t need. Is he single and living alone? Can he get a flat mate? Maybe tricky right now as you would have to trust the person to be responsible and not infect you.
                    Most people would not want to bother doing a budget but if someone is desperate they will. You may want to suggest areas they can cut back like alcohol and cigarettes.

                    Then look at your own situation. Can you afford it? Do you have an abundance of spare cash and a job which will go on or are you going to struggle to make mortgage payments.

                    Personally if my good tenants genuinely can’t pay and I have extra cash I would consider their case based on the information they provide. After all if they don’t have money and can’t find work they actually aren’t going to pay anyway along with many others so the chances of finding someone who will are reduced now too.

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                    • #11
                      And rent 'reduction' needs to be in the form of a personal loan and carefully documented as such. With a guarantor or two, if possible. The repayment schedule could be, ahh, a bit elastic.

                      As has been observed, no financial institutions, electricity suppliers, councils, IRD, food & medicine suppliers will be giving up anything, as things presently are.

                      Maybe someone here qualified to do so could produce such a form, then have any tenants requesting a reduction take it to the local WINZ office, as part of the process that Artemis described here?

                      That could produce an interesting result.
                      Want a great looking concrete swimming pool in Hawke's Bay? Designer Pools will do the job for you!

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                      • #12
                        Landlords in business have been toughening-up because of unequally changes imposed and the tough-minded RTA reform coming, and surely a new dictated rent policy isn’t far away. Yes, rent reduction in individual cases will be an option to support renters who have been supportive in the past.

                        We would process a rent reduction application in the same way as govt agents and banks do. Applicants sign a disclosure form with their income, WINZ response etc for making a reasonable decision. Any changes would be attached to the tenancy agreement.

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                        • #13
                          Yeah, that seems about the crux of it for me too Hawkeye.

                          I'm just as equally amazed tho that tenants have even thought for it to be a consideration! Talk about lateral thinking. Good on him tho. It's got our thinking caps on now too!

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                          • #14
                            I've already had several requests for rent reductions from some of my commercial tenants - their revenues have slumped. As I'm just about to start sending out annual invoices for the new financial year, I've made reductions to their invoices. The reductions in rent, up to $10,000, are for 6 months, and I said to each that it will be reviewed at the end of that time. It is only the rent that's going down, not rates, insurances etc, as I have no control over these. The larger tenants have not yet contacted me, and neither have any of the residential tenants.

                            I feel that I need to support them, as they are small business owners who have worked hard in their businesses, and this coronavirus is not of their making, and the situation they find themselves in is not a result of poor business management. It's just something that has suddenly affected us all. If I tell them to leave, who will replace them?

                            I'm hoping that the larger tenants will not ask for any rent reductions. I'm sure they have the resources to tough it out (some are national and multi-national companies, but you can never tell - look at Air New Zealand!).

                            As for the residential tenants, I think it is inevitable that they will seek rent reductions in due course, knowing their occupations. I'll probably look at rent reductions too, if they ask. Although if they lose their jobs, the reductions may be quite sizeable.

                            Hard times ahead for everyone, and I think we need to support our tenants while they are going through (hopefully, a temporary) difficult period.
                            Last edited by learner; 22-03-2020, 06:41 PM.

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                            • #15
                              All Together Now

                              Originally posted by learner View Post
                              Hard times ahead for everyone, and I think we need to support our tenants while they are going through (hopefully, a temporary) difficult period.
                              The sentiment is ideal, but it needs to be across the board. I.e.

                              Councils (Rates)
                              Insurance companies (Premiums)
                              Gummint / tax / IRD (Scrap min. wage increase; suspend provisional tax payts)
                              Electricity suppliers (daily / fixed and per unit charges)
                              ACC (levies)
                              Banks (interest rates, repayt holidays, interest only, etc.)
                              Food suppliers (???)
                              Others?

                              If everyone takes a hit on a pro rata basis, we'll get through it.
                              Want a great looking concrete swimming pool in Hawke's Bay? Designer Pools will do the job for you!

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