4 ways to be a good landlord in a time of coronavirus

Written by Emma Baker, Professor of Housing Research, School of Architecture and Built Environment, University of Adelaide

The COVID-19 pandemic is creating major challenges for our residential rental system. The lockdown of businesses has meant an almost overnight loss of jobs or reduced hours for many Australian workers. Many tenants are struggling to pay their rent.

While the release of a government package to help residential renters has been mooted for weeks, the only concrete outcome so far has been a halt on evictions and some progress in individual states and territories. The rapid sequence of events has left renters – that’s about one in three Australian households – and landlords in uncharted territory; they must renegotiate their terms.

We asked stakeholders from across the rental market – landlords, tenants, advocacy groups, housing researchers – for ideas on what ethical landlords might do in these highly uncertain circumstances. We discuss some of these ideas later in this article.

Landlords are taking a hit too

But, first, it’s important to remember it isn’t just renters who are struggling. Some landlords are too. For many of Australia’s more than 1 million “mum and dad” landlords, COVID-19 has dealt a blow to their relatively safe bricks-and-mortar investment.

On the other hand, landlords may have access to mortgage holidays and low interest rates. Some are also calling for relief on rates and other costs associated with their investment properties so they can better support their tenants.

At the coalface, responses from landlords, letting agents and property managers have reportedly varied widely. The official position of the Real Estate Institute of Australia is that a “a moratorium on evictions during these challenging times is the correct thing to be doing”. However, there have been widespread reports of threatened evictions, suggestions renters draw on super or use savings to pay rent, or that rent reductions will only come in the form of deferred loans.

Pulling together in a crisis

Australians have rallied together in this crisis – checking up on older neighbors, for instance, or delivering groceries or home-baked bread to isolated friends and relatives. This is grassroots stuff, which has largely happened separately from, and in advance of, formal government responses. People see COVID-19 as a shared challenge, and there is a lot of goodwill.

In this environment, while landlords are rightly concerned to protect their investment and keep paying their mortgages, many also have a competing concern to help out their tenants.

The problem is, in such a dispersed system of ownership, there is no template for how they might help, and no library of what other landlords are doing, so each mum and dad investor is responding in different ways. Anecdotal evidence suggests some letting agents have been contacting landlords for direction on how to respond to requests for rent reductions and gauging attitudes to eviction.

An added complication is that many of the responses that aim to help out tenants may be counter to the best interests of letting agents, who receive a percentage of rental income.

4 ways landlords can help

Here are some ideas in response to our questions of rental stakeholders:

Talk directly with tenants if you can, or at least ask to be included in the conversation.
Everyone will have different pressures. Work out what position you are in. Find out what concessions your bank may be offering, what inflexible costs (such as council rates) you have, what landlord insurance covers you for, and how much of the pain you are prepared to share – and for how long. Ask your tenants to do the same. This will form a good, and hopefully fair, basis on which to compromise.
Use letting agents who reflect your values as a landlord. You may wish to have a chat to your agent and ask that they notify you if tenants are having trouble. Some landlords have gone further and requested that all communication between agent and renter is cleared by them first.
Share success stories. One of the motivations for this article was the lack of information for mum and dad investors who are trying to be good landlords. Options to offer tenants as part of negotiations might include rent reductions, or deferred rent, but there aren’t many examples of what other landlords have done out there.

It would be helpful if landlords shared the solutions they have developed, what worked and what didn’t. Even though every case will be different, having positive case studies available for other landlords to emulate will be valuable.

The full extent of COVID-19 and its effect on employment, housing and the economy just isn’t known. And neither is the full detail of what government assistance may be provided – or the implications for landlords, tenants and agents.

Impacts are affecting everyone

It’s worth remembering that we’re all in this together. Everyone in the rental system – tenants, landlords and agents – will feel the effects of the pandemic.

Many households have already been tipped into post-COVID unemployment, many landlords will also have lost their jobs, many agents are overwhelmed by trying to keep businesses afloat while quickly mediating temporary solutions. And many want to do the right thing – tenants and landlords alike.

Everyone is waiting to know the shape and impact of any government response. Although it is difficult to adequately plan long-term responses to hardship, individual landlords can do a lot in advance of government help, and in addition to it.

Authors: Emma Baker, Professor of Housing Research, School of Architecture and Built Environment, University of Adelaide