With rent increases in Australia’s capital cities experiencing their slowest growth rate in nearly 20 years and residential vacancies continuing to surge, there’s no denying tenants are in the driving seat at the moment.
What can landlords do under these challenging conditions predicted to persist for some time?
The cyclical nature of the property market dictates that this current tenants’ market will not last and momentum will eventually shift. But until conditions change, there are several things landlords can do to maximise rental opportunities and preserve their investment. Denial, ignorance or blind optimism are not options. If landlords do not accept the reality of the current market situation and take positive action, they could end up putting their investment at risk.
Here are five key tips for landlords in a tenants’ market:
1. Be open to negotiation
Landlords need to be open to negotiation to meet market demands. If a landlord doesn’t adjust by offering reduced rents or shorter lease contracts, they may expose themselves to considerable financial loss. Yes, returns will be lower, but a reduced weekly rental is infinitely preferable to a vacant property. Landlords should be prepared to negotiate, drop rents and offer more flexible contracts in order to attract or keep tenants. It’s also worth discussing contracts with tenants well ahead of the renewal date to ascertain their intentions and negotiate terms of a new lease.
2. Offer incentives
Zero vacancies are the holy grail of property investment and in order to make a property attractive to a greater pool of prospective tenants or make it more appealing to current tenants, landlords should be prepared to offer incentives. Accepting pets, adding extras such as garden maintenance and offering a week’s free rent are all ways that landlords can incentivise tenants and prospective tenants.
3. Treat tenants with respect
A good landlord will always treat tenants fairly and respectfully, but in the current tenants’ market, it’s worth going the extra mile. Respond immediately to any queries, pre-empt maintenance issues, offer unsolicited extras (having the carpets cleaned or paying for a garden tidy-up) and deal with any requests for a reduction in rent sympathetically and realistically.
4. Improve presentation
The appearance and presentation of a rental property is of paramount importance in attracting tenants in the current market. Well-designed properties with quality finishes and added extras like air-conditioning and parking are always going to be more sought after, and landlords need to think about what the property lacks and where upgrades and improvements could be done in order to make it more attractive.
5. Be creative with the marketing
In today’s challenging environment, landlords need to implement creative and far-reaching marketing strategies to promote their property, reach the widest possible audience and attract interest. All types of communication channels should be considered. It’s also worth engaging professionals such as an experienced property management company in order to get a favourable outcome.