The end of JobKeeper on 28 March will not only impact renters — it’s set to have a massive knock-on effect for property managers, a property management expert has flagged.
According to Shannyn Laird, the head of customer experience at :Different, there are still 1.5 million Australians reliant on JobKeeper.
“Its end this month could leave many renters unable to pay their rent, or asking for rent reductions to make ends meet,” she said.
She expects this will have a subsequent roll-on effect for property owners, with landlords “left out of pocket and potentially struggling to pay their mortgage”.
From her perspective, “property managers will need to navigate tough conversations between owners and renters, and tap into their negotiation skills to help their clients come to a fair agreement for both parties”, she stated.
She acknowledged that the support provided by JobKeeper and mortgage relief measures have cushioned some of the financial blow for property owners in 2020.
“It’s very likely the end of this scheme will result in a rise in distressed owners. Landlords of vacant properties (particularly in areas where demand is really low and vacancies are at an all-time high) are struggling already, and concerned about how to pay their mortgage if the property doesn’t lease shortly,” she outlined.
The head of customer experience added that owners of negatively geared properties are also acutely aware of the gap between the rental price per week and the cost of their mortgage repayments, despite interest rates being quite low.
From her position, “this is all compounding to create a stressful situation for owners, and something property managers need to tune in to”.
Ms Laird said while owners with tenants who are on a fixed-term lease will be better protected against potential rental income losses, “this is still not a complete guarantee”.
She expects over the coming weeks that these owners will lean on their property managers “more than ever”.
Preparing for the end
To prepare for the drop-off of support measures, the head of customer experience is recommending property managers employ complete transparency with their clients.
She advises conducting proactive discussions about the market and what is currently required to get properties leased.
“Property managers should map out what vacancy will cost owners versus what a price reduction and quick tenancy will net them in the long term,” she flagged.
For clients with tenanted properties, that means being honest with tenants about the landlord’s position (particularly when it comes to maintenance).
For tenants, Ms Laird recommends working with them regarding rental arrears as well as being diligent with enforcing payment plans.
Most of all, she recommends PMs “take the time to understand their position (the tenants’) and the owners’”.
“Make sure you land on an agreement that both parties are comfortable with,” she said.
Ms Laird has also highlighted a number of ways property managers can provide safeguards for both tenants and landlords.
She urges placing all agreements in writing and ensuring appropriate insurances — such as landlord insurance — are in place.
“Refer back to legislation and the signed tenancy agreement, revisit any temporary rental agreements in place and ensure they’re based on the current position of both parties,” she added.
All in all, the customer experience guide recommends PMs give landlords and tenants “direct, honest, transparent and empathetic advice”.
Not only that, property managers would be well heeled to “have the tough conversations proactively, rather than reactively”.