Victoria has suffered the worst impact from the Coronavirus lockdowns, with the state’s capital, Melbourne going into a stage 4 lockdown on the 2nd of August. The state has not yet come out of lockdown which has had significant economic consequences.
Although Victoria’s property industry has been surprisingly resilient to the Coronavirus restrictions however that may only be temporary. It has been reported that more Victorians are struggling with their housing commitments with renters been hardest hit. Renters have been hit harder than home owners. The average renter in Australia is 34 years old with an average income of $66,000 per year. This compares with home owners who have an average income of around $80,000 per year. Along with their lower salaries, renters are more vulnerable because they are more likely to work in insecure industries such as hospitality or retail where workers have a higher chance of being on a casual contract.
The effect of a high number of renters being in insecure work is that when the lockdowns started, many of them lost their jobs or had their hours reduced. Many were either forced to rely on the Coronavirus Early Release of Super program or to rely on government support to cover their rent payments. There have been a huge number of stories in the media about people being unable to pay their rent at all and being in arrears. As discussed early on in the Coronavirus pandemic, people were advised that while they would be offered a period where their landlords were not able to evict them, they would be liable for any rental arrears that they incurred during the time that they weren’t able to pay their rent.
The lockdowns have made it impossible for renters to view prospective properties because home inspections couldn’t be held until recently. Fortunately there are alternatives for renters, and one alternative option is to negotiate with your landlord for a lower rent. Negotiating a lower rent could save you thousands of dollars each year, depending of course on how much the rent reduction is worth.
Before you start the rent reduction negotiation process there are steps you need to take first.
- Research the market. Look at comparable properties in your area and have a look at the prices. See what other tenants are paying for. If you’re going to ask for a rent reduction then you need to know exactly what the current market conditions are to add strength to your negotiations. Knowing the current rental prices in your area increase the likelihood that you will get the rental reduction you want.
- Know what you’re willing to pay. Knowing how much you are willing to pay will indicate to the landlord or your real estate agent that you have confidence and are serious about getting a rent reduction.
- Explain to the real estate agent or landlord why you should get a rental reduction. You will need to sell the idea to them. Given many people are struggling financially as a result of the Coronavirus pandemic, you are in a good position to sell yourself as a desirable tenant. Ways to sell yourself include proving that you look after the property and do not disturb the neighbours.
- Offer a longer tenancy. Draw attention to the fact that it costs your landlord a significant amount of money each time they need to find a new tenant for their property. Costs involved in finding a new tenant include advertising that the property is vacant, spending time showing people through the property, cleaning the property each time a tenant moves out and the obvious cost between tenancies. Offering a longer tenancy gives the landlord income security because they are guaranteed rental payments for a longer period of time and that would be attractive, especially in a recession.
- When you’re negotiating the rent for your home, it’s also worth being open to compromise. As above, on top of offering a longer lease period, you could offer to handle the property’s maintenance. For example, if the landlord normally hires a professional to come in and mow the lawns you could offer to do this yourself. You could also offer other benefits that might appeal to them.
The main point to note when asking for a rent reduction is that you are more likely to be successful in your request if you can support your request with data. If you don’t have time to research the market, or wouldn’t know what to look out for then this is where a rental review valuation comes in. A rental review valuation is an independent valuation specifically for the purposes of negotiating lower rent. It will give you leverage and you can attach it to your rent reduction application.
Valuations Victoria specialise in rent review valuations and we would be more than happy to assist and we are available on (03) 9021 2009.
If you would rather look for a new property then Homely has plenty of Melbourne properties listed that might be more suitable for you.