Landlord Rental Alert

Dear Clients

LANDLORD RENTAL ALERT

We have noticed a significant change in residential rental occupancy just starting to occur in Sydney and you need to be aware.

Real estate agents and economic statistics are now reporting the highest vacancy rates for residential properties since 2004 being the post-Olympic overhand of property surplus

The cause is not related to one specific issue but a variety of factors, namely:-

-Interstate migration of families and millennials from Sydney to Melbourne and Brisbane predominantly for cheaper accommodation and lifestyle

- Rental price of new developments being unable to be sold and bought by investors in areas such as Zetland with an overhand of stock with new 2 bedroom units renting for $500-550 per week. This is in stark comparison to older style units in the East renting for between $700-750 per week. Although this entails a suburb movement to a possibly inferior address, with the option of reasonable transportation and the experience of living in a new development with gym facilities, etc, we are seeing a shift from renters to these suburbs predominantly due to the price differential

- Large uptake of stock by first home owners in the last three years leaving surplus rental stock in Sydney.

ACTION PLAN FOR LANDLORDS -

Don’t be greedy on rent renewals. In the current climate, a renewal at the same rental price except if you are substantially under market, is a sensible commercial way forward.

- Try and mature your lease into summer (excluding obviously the December/January holiday periods, ie have maturities in October/November and February/March. If you are renewing your lease now, try for a longer period, ie an 18 month lease with a fixed 12 month rental and say a $10-20 increase for the last 6 months of the lease.

- Make sure your property isn’t looking too tired. Bathrooms and kitchens may need updating even to stay competitive in this marketplace.

The take-out of the above is you must become an active manager of your properties and take control. Make sure you are active and you coordinate with your agent who is on top of these issues in the process.

THIS STATEMENT WAS PREPARED FOR THE PURPOSES OF OUR CLIENT ONLY FROM RECORDS AND/OR INFORMATION SUPPLIED TO US. WE HAVE NOT CARRIED OUT AN AUDIT AND WE DO NOT ACCEPT RESPONSIBILITY TO ANY PERSON WHO RELIES ON THIS STATEMENT.