Throughout COVID-19, property managers have received a reminder of the importance of looking after tenants as well as landlords, with property management being a give-and-take relationship between the two parties.
During a recent episode of REB sister brand’s podcast, The Smart Property Investment Show, Pure Property Investment’s Paul Glossop reminded investors that if they have done the right thing by the tenant, they will be less impacted by rent reductions.
“I’ve always advocated to landlords to be accommodating within reason so your tenants become considerate of you as your landlord,” Mr Glossop said.
“What that ends up doing is creating an ecosystem of a give-and-take situation.
“In these situations, when you have a little bit of hard times, you don’t get these requests saying, ‘Bugger you, you’ve been a bastard, and now I’m going to stick it to you’.”
Mr Glossop also explained the importance of property managers having open and honest conversations with tenants who try to claim rent reduction, with the government packages making rent affordable.
“The vast majority — and I’m talking the vast majority, 95 per cent plus — should not be in any way, shape or form in a position where they shouldn’t be able to afford what housing they were paying for from March onwards,” Mr Glossop said.
Mr Glossop highlighted the average rent in Australia is $430 to $440 a week. This means that if a couple who have both been made redundant and put on the JobSeeker allowance, they would receive $550 a fortnight each.
If a couple living together received either benefit, they’d have an average rent of $440, leaving almost $700 a week spare after rent.
“That is the part where the property managers have an important piece to play in this puzzle. They need to educate the tenant, if they are coming to them and saying they are under financial hardship,” Mr Glossop said.
“Their job is to guide them and circumvent the issues and say make sure you speak to your employer about the JobKeeper or speak to Centrelink about the JobSeeker allowance because based on those numbers you should have surplus cash flow of X.”
He advises that the average would be about 30 per cent of income, which is below the 35 per cent property managers usually advise.
Host Phil Tarrant also explained to property investors that they are ultimately paying the property managers’ way, meaning they work for the landlord and not the tenant.
“This is truly a litmus test for any property manager, is that your property manager is ultimately paid by you as the landlord,” he said
“You are the client. So, you need to make sure if they are not pulling up their end of the bargain, that they are reminded of it pretty frankly.”
Mr Glossop said: “But realistically, this is their role. They need to be on the front foot, providing information to [tenants about government benefits] and they also need to ensure they know who is going to be their client at the end of the day.”
While explaining that, ultimately, the property manager needs to have a tenant as they receive a percentage of rent paid, Mr Glossop told investors it’s important about providing the right balance between landlords and tenants.