Property management: preparing tenants for a challenging market

23 Mar 2022
Estate Agents Co-operative

Every week, the Australian media, regardless of channel or title, reports on the auction clearance rates from the previous week.

As a nation, we are fixated on sales results and equally obsessed with one day purchasing our own home.

But the fact is, more than a quarter of Australians are renting property at any one time, and many Australians will never own a home.

What this means, is while auction clearance rates are an indication of economic and market performance, rental vacancy rates and rental market conditions may be a much more telling representation of what’s happening in housing in our country on any given week.

EAC spoke to some of our property management members, and in both regional and urban areas, with the exception of a few locations, news was the same: vacancy rates are extremely low and properties are filling at record rates.

In fact, in north west Sydney, one agent told us they can have hundreds of people competing for one house, and some who have been looking for three or more months.

“I have would-be renters who have had to move into hotels because they just can’t get their application accepted for any of the properties they apply for. It’s not because their application is poor, or really any different to anyone else’s, it’s just because there are so many others applying. They are frustrated, there are often tears and sometimes anger.”

“Right now, and actually for quite some time, there has just been such a huge difference between the volume of people looking for houses in this area, and the inventory.”

Reasons for the low inventory vary, and while Covid has certainly had a part to play, agents are also seeing owners choosing to move back into investment properties, coming back from overseas, or taking advantage of a strong market and listing for sale.

For some property managers, this means the question you are most asked is ‘how can I improve my application and my chances or success?’. As our members tell us, unfortunately in a lot of cases, they are already doing everything they can.

Despite that, for those tenants who are just about to start their search, our members have advice other property managers can share, to help manage expectations and speed up that search.

1. Tenants need to know what they’re prepared to sacrifice

Ultimately, the days of finding ‘the perfect rental’ are over in most areas. Would-be renters can have their list of criteria, but if they want to succeed, and be able to move in to a new property when their current lease ends, they need to know what they may be prepared to sacrifice. For some, it just means being a little more aesthetically open — older homes, a different style than they usually like or a mismatched paint job and some unique colours inside.

For others, it means more functional or feature-driven sacrifices, like forgoing air con or the pool they want.

If they’ve been searching for some time, it may be their own criteria, in this right market, that is getting in their way.

2. Look at surrounding areas

One of the main reasons people select a specific suburb to rent in, is school catchment areas. And while children are of course number one priority, sometimes your renters need to extend into surrounding suburbs in order to give themselves a better chance. While unfortunately this can mean a change in schools, many localities in Australia have excellent schools with strong results.

Alternatively, if a school change isn’t for your would-be tenants, they need to potentially consider forgetting a home, and looking for a larger apartment. Though there aren’t a lot of three bedroom apartments in many areas, there may be ground level apartments with larger outdoor areas.

3. Be prepared to live by someone else’s timing

Our members tell us one key reason people can miss out is because they just aren’t prepared to move at the time the property is vacant, where others will. For landlords who are paying mortgages and require rent to do so, having someone in their property at all times is vital.

Being prepared to move a bit early and putting some money aside, if possible, for that week or two of overlap can make a difference.

Likewise, some are making the mistake of thinking the market is the same as last time they looked, and they are starting their search way too late. Property managers should tell tenants to start looking early. In fact, to enhance your service, you could automate an earlier check in with landlords regarding their plans, and if they intend to end the tenancy, automate communications to advise tenants to start looking earlier, explaining the state of the market.

4. Have references ready to go

When applicants submit their forms, most have listed their references, as requested, and those who haven’t, know they don’t stand much of a chance.

That being said, sometimes it’s less about listing references, and more about if the listed references actually answer in a timely manner. Encourage would-be renters to call their own references before or as they submit, and make sure they are geared up, waiting by the phone and ready to go!

5. Make themselves an easy tenant

When it comes to markets like this one, landlords have a huge list of potential applicants to choose from.

Like any human being — and it’s only natural — they will lean towards tenants that seem easier right from the start.

Though it’s not ideal, one of our members tells us, advising tenants to limit their requests in the application process or during their rental, can help them win and keep a property.

That, however, does not mean people should live in properties that are sub-standard. Absolutely report and make requests about the essentials — water, damaging leaks, doors locking and associated security — but consider how much they really need the nice-to-haves.

As agents, dealing with low vacancy rates can actually be very challenging and emotionally-draining. You are people too, and witnessing the distress and desperation of other people and not being able to help them can be exhausting, frustrating and upsetting.

The best you can do, is provide guidance, based on your experience throughout your career, be empathetic and manage expectations honestly and carefully.

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