Possible After Effects Of Alert Level 4 on the Rental Market

Possible After Effects Of Alert Level 4 on the Rental Market

What Property Experts Have To Say…

The Alert Level 4 Lockdown has already impacted the rental market in an adverse way and has immensely slowed rental income/investment for some landlords. According to a survey run by a property management consultancy Real iQ, it seems the rents in New Zealand are likely to fall as a result of Covid-19 and the Level 4 Lockdown. As we as a community seem to be making some head way in terms of fighting off this lethal virus, our property rents may not be in for the same.

The director of Real iQ predicts that property management companies in Auckland will likely face default rates of more than 20%. This means 1 in 5 rental properties are likely to fall into rent arrears. A survey carried out at the start of the lockdown period highlights an increase in rent arrears from 3.23% to 6.57% by the property management companies that completed the survey.

Based on Real iQ’s survey 40% of the property management companies taking part believe that the market rent will remain the same. The remainder have varying opinions on how much the rent could fall by, the highest being 20%.

There may be some discrepancies in the different areas that are effected. Low income towns such as Mangere, Papakura, Manurewa, in South Auckland may not be highly effected as rents are already generally low. Whereas the high-end rental suburbs may see a bigger effect on their market revenue and rents as staff are laid off and contracting work is slowed down or put to a stop and rent becomes less affordable. One of the mostly effected areas could be the Auckland CBD with its apartment market and student accommodation.

“If rents exceed more than 40% of the tenants net income, then they will likely struggle with payments. Incomes are going to decrease and rents will follow”, says David Faulkner (Director of Real iQ).

As unemployment increases in these coming months things are not looking good for the rental market. “The net income for New Zealanders will be negatively impacted and this, in turn with an increased supply of rental property will lead to an inevitable drop in rents.”

David believes that landlords are likely to sell their investments as employment/income rates continue to plummet and they are forced to release capital or mortgage sales.

Whilst it may be a bit worrying to be a landlord right now Reliance Property Management is here to help. With our knowledge in property and the rental market we can provide you the best advice when it comes to renting out your investment. We also have experience dealing with rent arrears and means of retrieving your rent money, as well as a database of tenants who are actively looking for rentals to ensure your property is not left empty.

There may be some things you could do during the lockdown or your downtime to make your rental property look more attractive.

Clean up your entrance – your entrance is the first thing people see, so you want people to have a good first impression.

Garden – make sure the lawns are mowed and the garden is nice and tidy.

Fencing – gives your property and tenants added security and privacy. It also increases the value of your property.

General Maintenance – use this time to fix small wear and tears that may have arisen over the years. In turn helping you find better tenants.

Get Your Free Rental Appraisal.

Covid -19 Update

Covid -19 Update


As you all will be aware the coronavirus pandemic has escalated and continues to have major consequences on all aspects of our society. From a property management perspective there are both economic and social ramifications that could impact your rental investment.

IMPACTS ON OUR LANDLORDS – From a property management perspective

Property Marketing/Viewings

Due to the enforced lock-down viewings are not to take place as they are not included in the essential services list. However virtual viewings through photos/videos may be possible.

Rent Freeze

The government has announced a freeze of all rent increases for the next 6 months. This includes any rent increases notices given to the tenants before the lock-down period which were to take effect during/after the lock-down period.

Tenant Protection Temporarily Increased

There are now limited reasons for which a tenant may be evicted.
These reasons include –

  • Substantial damage to the property
  • Assaults and threats to the landlord, landlords family or neighbours.
  • Property left abandoned
  • 60days behind in rent as opposed to the 21days.

These changes will remain in place for 3 months and may be extended. Any landlord/agent not adhering to these rules may face fines of up to $6500.

Mortgage Payments

The government, banks and the reserve bank have announced a 6 month mortgage holiday scheme to take some pressure off landlords who have been impacted by the virus.
However a “mortgage holiday” does not mean you do not pay mortgage for 6months. Though you will not be making your mortgage repayments, your mortgage interest will continue to accrue, which means the amount required to be paid will remain the same and you will just be deferring the payments.

Inspections, Repairs and Maintenance

Routine inspections and maintenance do not come under essential services, therefore will be deferred till the lockdown period is over. Some insurance companies however require quarterly inspections to be carried out, therefore if a landlord is concerned they should contact their insurance company to see how they will be treating this matter. Urgent repairs may be carried out if related to essential services such as water, power, waste or gas.

Tenancy To Start/End During Lockdown

Travel is restricted to essential travel only (supermarket trips, doctors visits, etc) during the lockdown therefore moving house is not classed as an essential service. However if the Ministry of Housing and Urban Development suggest that if a tenant does need to move during the lockdown they do so by following the Ministry of Health guidelines and keep to their “bubble” and do not come in contact with anyone outside of their “bubble”.

Tenancy Tribunal

The courts, tenancy tribunal and justice system in New Zealand are considered as an essential service. They will continue to operate and hold possible hearings via telephone or video-conference.

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