COVID-19 CRUNCH – what your tenants are thinking
about.
Many tenants (new and existing) are thinking about
their position in ways none of us could have predicted. Some are asking for
protection during times of lockdown, payment holidays if their income is
interrupted because of a national crisis, or even break clauses that allow them
to terminate a contract early should their income be permanently affected by
COVID. Is it feasible to offer this type of coverage for tenants? How would
that impact rental value? Or is there another way to tackle the issue?
What most
Landlords, and Tenants don’t realize is that Tenants have a basic form of these
rights anyway! That is, if a Tenant is made redundant, can no longer afford the
rent, and requests to leave during a fixed term period, the law stipulates that
you must ‘mitigate your losses’. This means you must make every
effort to replace them as a tenant and release them from their contractual
obligation.
COVID-19
specific clauses
It is
feasible to offer COVID-19 specific clauses that, (a) Will help let your
property and, (b) Help you achieve a better rent?
The short
answer is yes and yes. In reality the government already protects tenants from
being penalized if they need to get out of a lease owing to unforeseen
circumstances. So, why add a new clause? The key to success with any tenant is
communication. The more comfortable they are with you, the more likely they
will reach out to have difficult conversations. It’s common sense really, but
sadly a lot of property management personnel in agencies have been trained to
treat the tenant as the enemy. A lot of property admins regard the tenants as
some sort of second-class citizen, which does nothing but create barriers.
If a tenant
can’t pay, it’s in everybody’s interest to get them out asap so you can let the
property out again. Holding on for rent is – as my mother would say – like cutting
your nose off to spite your face. It makes absolutely no sense.
The question
of whether you can charge more rent for adding clauses to protect a tenant in
times of unprecedented difficulty is unlikely – in my opinion. That said, if prospective
tenants feel safe and protected, they are more likely to rent your property and
pay what you are asking! I think the issue is how to ‘market’ that without
sounding exploitative. I’d encourage landlords to look at it as a great way to
build communication bridges with tenants and make them feel comfortable (and
valued).
With new
government guidelines being issues on what feels like a daily basis, it’s
important to keep up to date. We provide
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