Property investors turn to Ray White

MORE THAN 2000 property investors tuned in this week to a live YouTube interactive session held by Ray White and Loan Market to answer the burning questions keeping landlords up at night right now.

Property investors from London to Brisbane dialed in to get the low down on the current investment scene from Australasia’s largest agency group Ray White. The group has a unique perspective on the property industry given its scale and depth. The family owned and led group sells one in nine properties in Australia and it manages 210,000 rental properties.

Australia and New Zealand’s award-winning mortgage and finance solutions company, Loan Market helps 24,000 clients with their mortgages every year.

Ray White CEO of Property Management Emily Sim told the landlords the group’s data showed vacancy rates in its rent rolls decreased between March and April across the board by less than five per cent.

“We attribute that to property management businesses reading the play early and working extra hard with their landlord clients to lease property in case vacancies did become an issue. We have seen through many media reports this week reporting inflated vacancy rates, one quoted as high as 13.8 per cent in the Sydney CBD,” Ms Sim said.

Dan White, Managing Director of Ray White, said the greatest challenge to vacancies the group was facing was in the capital city and holiday markets where short term stay accommodation has re-entered the long term market.

“While we expect continued strength in our property management businesses, at this point in time the combination of ex AirBnB property, vacant city hotels and the brand new apartment stock still coming to market has created increased vacancy rates at this point in some of those particular sub-markets. Rents in capital cities are now reducing to meet the market and at this stage we are seeing this at about the 10-15 per cent range but we expect it may creep higher in June.” Mr White said.

“The conversion from short stays to long stays is part of the issue but it may return back soon too as tourism begins to open up again.

“It’s a rapidly evolving space but we are in the business of shelter, which is a key ingredient in any community and economy, an essential service.”

On the hot topic of rent reductions, Ms Sim said the facts were comforting.

“Our greatest fear initially - along with every landlord in the country I am sure - was that rent would just stop being paid especially when the phrase “Rent strike” was trending. But we know from the data in our group that rent variations, deferrals or reductions make up less than 10 per cent of an agency’s rent roll business, so that’s good news. The arrival of balanced legislation has really settled this issue down.”

Ms Sim said the COVID-19 Emergency Act had now been legislated in every state and territory around the country.

It does mean different terms of engagement in each region but broadly the legislation supports tenants who can provide evidence they have been COVID-19 affected either for health or financial reasons from being evicted, if that is their choice.

“For landlords and investors not affected by Covid-19 themselves, but their tenants are affected, the best advice is to be proactive and manage the situation with a strong understanding of the tenant’s position and the legislation. Our property managers have so many case studies of great outcomes that avoided the tribunals.”

On the sensitive topic of evictions. Ms Sim said there were two ways to look at this.

“Are the tenants COVID-19 affected and can they provide evidence? Or are they unaffected by COVID-19? If they are not COVID-19 affected, the legislation supports you as normal, they have to pay their rent or vacate the property in line with tenancy legislation. If they are COVID-19 affected, the best position for you to be in is to negotiate with the tenants. Legislation requires you to in most cases, and regardless, from a practical point of view a negotiated outcome is often better than a vacant property.”

Most landlord insurance policies are now starting to advise whether they will pay out on their rent default policies for the COVID period. The good news is the Ray White policy has confirmed it will pay out if there is a default and they have re-written the terms for how property managers can manage rent during this period.

There were many questions from the audience on what the future might look like for property investment in the next 6 to 12 months.

“No one can predict with any certainty what might occur in that time period, but there is a lot we can do now to ensure our properties are managed well to maximise returns and occupancy, as well as to ensure our customers are proactive on assessing their finance options,” Ms Sim said.