A little update from us – the Auckland rental market in Level 3
Another month is behind us, and Auckland remains at Level 3. There is plenty in the media about alert levels, vaccination goals and economic packages to support the recovery, so I won’t go into detail here, below are a couple of trends we are noticing in the Auckland rental market.
Increasing requests for Lease Breaks
For some tenants the prolonged lockdown has changed their work/social/family situations and this has triggered them to reconsider their current tenancy. If your tenant is in a fixed term lease (and they wish to end their tenancy) they will need to cover the cost of re-marketing the property and also any downtime between when they wish to leave to when the new tenants are able to takeover. A lease break won’t cost you anything and is reasonably straightforward. There are three areas that you need to be aware of though.
1) Once we sign a new tenancy the rent will be fixed (and cannot be increased) for a further 12 months. If you do want a rent increase, we can agree on a end date for the tenancy but you do not have the guarantee of no vacancy.
2) A new tenancy will trigger Healthy Homes compliance. Your property will need to comply with the new Healthy Homes standard within 90 days of the new tenants moving in.
3) A tenant can ask the Tenancy Tribunal to end their lease early for extreme hardship under section 66 of the Residential Tenancies Act. Reasons such as loss of job, divorce, mental health and significant illness can all end the tenancy. Buying a new home or moving out of Auckland are not grounds to terminate a lease under section 66.
Each situation will be different and your Property Manager will support you in making the decision that best fits you and your goals.
Tenancy Changeovers – flatmates transferring
If your property is popular with groups rather than couples or a family, you will know about the continuous cycle of flatmates wishing to exit and enter the lease. Although this doesn’t represent a threat to rental payments, it can dilute the quality of the initial tenancy make up that we put in place at the onset. We do have a firm process surrounding tenancy changeovers so that you don’t end up with an inferior group compared to the one you chose at the onset.
If your tenants do wish to change, we ensure that the incoming tenant completes the full background and references checks. A full entry inspection is completed, and any damage addressed with the current tenants before any new tenants enter. This gives us an opportunity to involve the current tenants in resolving anything as it happened rather than waiting till everyone finally moves out (often many years later). At this stage it is hard to prove who damaged what and when.
We also tidy up the bond and paperwork, so we have everything ready for the continuing tenancy. There is no cost to the property owner for this process and a change of tenant doesn’t trigger healthy homes or restart the clock on the annual rent increase.
Letting – A lack of urgency
For a variety of reasons the sense of urgency is lacking for many tenants. This coupled with hefty restrictions on the amount of people we can show a property each day is meaning that properties are spending more time on the market. Where properties used to rent in 6 days they are now taking 11 days on average. And although the rents are not significantly softening, those wanting a tenant quickly are initially reducing rents to secure someone fast.
If you need advice, reach out. Natalie – 0211311203 or firstname.lastname@example.org.