Before the coronavirus crisis, the main goal of a property manager was to find the best tenant for a rental. Now, they have been forced into the role of power house negotiator – and counsellor.
Property managers have become counsellors and negotiators during COVID-19. Picture: Getty
Since the pandemic took hold in mid-March, the rental market has been hit hard. Tenants are vacating due to financial hardship after losing their jobs; requests for rent reductions continue to flow in, and there is a huge supply of rentals coming on to the market being met with limited demand.
In the middle of all this is the property manager who has had to rapidly adapt to the new climate and learn new skills.
Property managers have become counsellors
The huge loss of jobs brought on by the health crisis has impacted peoples’ ability to pay rent and make mortgage repayments.
Mental health support service, Lifeline, reported a 20% increase in call volumes in March with one in four calls relating to coronavirus.
“In one week within our business, three tenants told their property managers that they were considering taking their own lives, saying the pandemic had left them in financially dire straits,” said Sam Nokes, Head of Department – Property Manager Jellis Craig.
But there is also financial stress for landlords. A Federal Government-imposed six-month moratorium on evictions has left many mum-and-dad investors with no choice but to allow their financially distressed tenants to stay, even if they can’t pay their rent.
While many lenders, including the Big Four, have granted up to six-month loan holidays on mortgage repayments, interest will continue to accumulate.
Debt looms over both tenants and landlords, leaving property managers in a sticky spot. While their aim is to keep a tenant in a home, they also want the landlord to remain financially stable.Play Video
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Across the country, property managers are dealing with difficult phone calls from both sides needing counselling on what to do.
“Property managers have always been known to have to deal with the social aspects and counselling and budgeting of the tenants, but with COVID-19, it’s heavier than it’s ever been,” said Real Estate Institute of Victoria president, Leah Calnan.
“It is really challenging because you’re dealing with what could be someone’s biggest financial asset and you’re dealing with somebody’s home. It’s a heavy weight for property managers,” she said.
They are also negotiators
It’s not just counselling that property managers have taken on in a large way, but negotiating. With a huge supply of rentals coming onto the market at the moment, property managers have their hands full.
“I do a lot of work in the city, and there are so many apartments available in the city at the moment. I think we’ve gone from 800 [listings] to 2,400 in the [Melbourne] CBD and surrounding suburbs and it’s so competitive to find someone good for these homes,” said Stefan Joannides, Business Development Manager – Belle Property.
But quality tenants are hard to come by, so properties are staying vacant for longer than usual and property managers are working around the clock to get a place tenanted.
“Guys on my team at the moment are carrying about 35-40 properties, which is a really unhealthy level,” said Mr Joannides. “We usually like to see them sitting at 25-30.
“There’s a lot of pressure on them – I was speaking to one of the guys earlier today and he said he had done about eight walk-throughs and no one was going to apply. So you’re spending your whole day out doing appointments and having no luck.”
Without open-for-inspections, there has also been less sense of urgency for tenants to apply, Mr Joannides added.
“It’s crazy because we’d normally have 10 groups show up to an open-for-inspection and they put pressure on each other to apply,” he said.
“Whereas we have been doing one-on-one appointments and people are really procrastinating. They are only really moving if they think they are getting an amazing deal, which is completely fair enough.”
Melbourne’s CBD has seen a huge increase in the number of vacant rental properties. Picture: Getty
Property managers are also being approached daily with a number of requests from tenants seeking rent deferrals, or discounts based on their financial hardship.
A property manager’s role is to explain to the tenants the next steps, which involves helping the tenants complete the correct paperwork and present their case to the landlord.
However, if a property manager can’t get the landlord to accept the rent eduction request, then the case needs to go before a tribunal.
“It’s heavy work, from an emotional point of view,” said Ms Calnan. “If you’re dealing with 10-20 rent reduction requests that all go through mediation, there could be a few hours of work for each one and you still have to have a good working relationship with the owner and tenant afterwards.”
But it’s not just those in genuine financial hardship from COVID-19 seeking rent adjustments – tenants in pre-existing properties are also approaching their property managers seeking better deals.
Renters can see that similar properties to theirs are on the market for less, so they have been asking their property managers for similar weekly rents, explained Mr Joannides.
“Sometimes owners accept it because they think ‘okay, I’m going to end up with a vacancy, I’m going to have advertising costs, leasing costs’. So they work it out and think, ‘okay, I’ll just give it to them for $500 a week to not lose more money’.”
Some tenants who haven’t received rent adjustments have moved out, or even moved to a different apartment in the same building, added Mr Joannides.
There are ways to support property managers
With the added pressure on property managers, especially during an isolating time when most of them are working from home, the industry is doing what it can to offer support.
Ms Calnan, who is also a property manager, said she is conducting regular zoom meetings with franchises and groups and has listed her number publicly in case any property manager needs help with a pressing issue.
She also said it’s important property managers check in on one another saying it could make all the difference.
The current climate in the rental market will likely remain the same for the foreseeable future, at least until industries start up again.
But there are positive changes happening within the market to give property managers hope, Mr Joannides said.
“I think now that 10 people are allowed to inspect homes, I feel like it will create a lot more pressure in the market and restore a bit more normality,” he said.
If you need help, contact Lifeline on 13 11 14.
article by realestate.com.au