The move from Alert Level 4 to Alert Level 3 will hopefully give the housing market more certainty about its future. For renters and landlords, there are still a lot of unknowns that need to be worked out.
The Government has banned any increases to rent prices for the next six months, and put in measures that prevent evictions in all but the most extreme circumstances.
Banks are providing payment deferral for owner-occupier mortgages but mortgage relief for rental properties isn’t universal.
Landlords who relied on income from tourists booking stays in their properties through Airbnb or Bookabach will have been hit hard by the travel ban.
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Some “mum and dad” property investors will be under pressure to sell, while others who are in a more financially secure position will be able to operate as usual and, in some cases, offer tenants rent reductions.
Many experts believe the rental market is likely to experience a period of upheaval.
Economics commentator Tony Alexander says owners of second homes that were being financed by profits made on Airbnb will likely turn them into long-term rentals or put them up for sale.
He cites Queenstown Lakes as an area that is prone to big changes in the rental market. The region was one of the most expensive places to rent before the lockdown, with rental properties few and far between. However, the region is about to face different kinds of market pressure. The tourism economy is on pause until the travel ban is lifted and demand for rental properties will drop off quickly as overseas workers leave the area and more rental stock comes on the market.
“Whatever price weaknesses Queenstown faces it’ll translate to Wanaka, Cromwell and other places workers have been commuting from over the past few years,” Alexander says.
The situation is already changing on the ground. One Queenstown landlord told OneRoof that they had reduced their tenants rent by 40 percent and deferred their own mortgage payments to ease financial pressures.
“We will be left paying the difference later, but we hope it makes their lives easier for now and they stay loyal to us when the market is later flooded with rentals, which I imagine will happen,” the landlord said.
In Auckland, landlords that can are supporting under-pressure tenants. Three tenants who had recently lost their jobs in the hospitality sector told OneRoof that their landlord had reduced their rent to help them out.
“It makes a huge difference and leaves me with enough money for groceries,” one of the tenants said.
Quick and polite communication with their landlord had made the process easier, she said, adding that her father and brother, aged 14, had asked the landlord of their Mt Wellington rental for a hefty 40 percent discount and he thankfully agreed.
“From my five sources of income, four got cancelled and the one I have left is also 80 per cent down and it's not just my situation, thousands of people are on the same boat,” the father told OneRoof.
Landlords also have bills to pay and not all will be in a financial position to provide relief.
Catherine Goodwin, chief executive of Auckland property management firm Goodwins, says many landlords will need rental income to stay in business.
“You need to pay the rates, manage repair and maintenance so it’s safe and do significant budgeting to meet healthy homes regulations,” Goodwin says.
She adds: “Not all landlords run huge portfolios – they are people who work incredibly hard to own one property as their retirement plan.”
A couple renting an apartment in central Auckland said they approached their property management company for a 20 percent cut in their rent for 12 weeks due to salary reductions but received an interest-free loan instead.
“Basically the $138 reduction per week will be added on top of our full rent price after the 12-week period when my partner’s wages return to normal,” one of the tenants told OneRoof, adding that the loan felt as if the company was “extorting the vulnerable”.
Mortgage broker Mikey Smith, who owns two investment properties, says every tenant has been affected by the current crisis differently.
His tenants are fully employed, and they agreed on payments would stay the same.
“It’s not an excuse for everyone to have a break,” he says, adding that landlords are also under pressure and will not be looking to sell their assets.
“It’ll be silly for a tenant to stop paying rent completely or for a landlord to start an eviction process because as a business you need a cash flow, so it has to work for both,” Smith says.
