Concerns around the rental market during Covid-19
The Government says it’s up to landlords and their tenants to have a conversation. OK, but before you do that, what options might be available to you as a landlord?
Information on a tenant relief package is still lacking. Does this mean that landlords are going to have to foot the bill so that renters can keep a roof over their heads?
Each state is working through their own rental relief plan. In Victoria (where most of our investment community hold interests) it appears as though the Andrews government is planning to provide rent relief payments of up to $2,000 to tenants experiencing rental difficulty due to COVID-19.
For updates pertaining to your particular state, you can visit the web site for REIV (VIC) REIQ (QLD), REINSW (NSW), REISA (SA), REINT (NT) REIWA (WA) and REIT (TAS).
Before having a conversation with your tenant or property manager, consider the following options:
Reduce the rent.
Help your tenant out by reducing their rent until they get back on their feet. This may not sound like a win-win but consider:
- lesser rent is better than no rent
- you may arrange make-up payments further down the track
- a tax variation may help improve your cashflow and work to help offset reduced rental income
Apply for a tax variation.
A tax variation is an annual application made to the ATO to vary the amount of tax withheld from your salary each pay period by your employer. This may provide additional help with cashflow (regardless of any rental shortfall). In some instances, you may be able to apply for a second variation within the same financial year.
Talk to your bank about a short-term pause on repayments.
Some banks are currently offering up-to a 6 month pause on interest charges. Other banks are offering a similar pause time on repayments altogether. If you are struggling to meet your repayments, get in touch with your bank and have a conversation.
Before you jump at this, remember that either option will add more time and interest to your loan in the long run.