Regional Qld vacancy rise puts PMs at the centre of rent negotiations

PRD Hervey Bay senior property manager, Robyn McKay, said the days of large rent increases were over, as affordability pressures weighed on renters.

“Rental prices are starting to stabilise, so when the opportunity comes for the owner to renew the lease, try to give them as much information as you can about why they should keep the rentals pretty close to what they already have,” she told REB.

“Because that can drive people away. If they get huge increases, they’ll go looking for something else.”

McKay said a compromise was sometimes needed, with landlords usually agreeing to reduce the increase if required.

Despite the Real Estate Institute of Queensland (REIQ)’s latest vacancy data showing a median vacancy rate of 1.0 per cent across the state, 27 of 50 regions saw an increase.

The REIQ noted there were more reports of tenants breaking leases, trading down to cheaper accommodation and higher-priced rentals taking longer to secure a tenant.

CEO Antonia Mercorella said that, like renters, property owners have also been feeling the affordability pinch, with higher mortgage repayments, insurance, maintenance and compliance costs stretching household budgets.

“Property managers are reporting that some owners are becoming more reluctant to undertake non-essential maintenance and upgrades because they’re finding it harder to absorb the cost,” she said.

To help landlords deal with the financial pressures of maintenance, which can help retain tenants in the long-term, McKay advised property managers to gather as many repair quotes as they could.

Additionally, she said property managers should advise owners to break non-urgent repair tasks up into smaller sections to make them more economically manageable.

“If they want to re-carpet the house, say, the carpet’s old inside the house, maybe do one or two rooms at a time and then leave it until you get the money together to finish off the house,” she said.

Managing tenant expectations

McKay also said it was important to maintain good communication with the tenant, explaining the landlord’s situation as clearly as possible.

“We outline to them that it will be carried out in due course – it’s not urgent, but the owner’s looking at it, and we’ll get quotes, and they are interested in repairing or adding something to the property,” she said.

When it came to tenants breaking their lease, McKay said property managers always ensure to act swiftly to get the property tenanted again.

“We readvertise the property as soon as we can, and ask the tenant if we could have access to the property to show people through so we can get it rented quicker,” she said.

The REIQ Residential Vacancy Rate Report showed that Fraser Coast and Hervey Bay’s vacancies were both up by 0.7 percentage points over the quarter, now sitting at 2.2 and 2.3 per cent, respectively.

Meanwhile, Maryborough was up by 0.6pp, Gympie, Mareeba, Caloundra Coast, the Gold Coast, and Burdekin all rose by 0.4pp, now sitting between 1 and 1.5 per cent.

Mercorella said while parts of regional Queensland had been tightening, vacancy rates across the state were still a long way from a healthy rental market.

“Rental markets in these regions could be gradually rebalancing, as new housing comes online with a promising upward trend in the number of building approvals and migration levels continuing to rise but at a slower pace,” she said.

She suggested that on the Fraser Coast, the completion of major construction projects that previously brought temporary workers to the region may also contribute to the rise in vacancies.

“However, what exactly is behind these handful of spiked vacancy rates is difficult to pinpoint,” she said.

“The REIQ cautions against reading too much into quarterly fluctuations when overall vacancy rates remain exceptionally tight across most of the state.”