Are you If the landlord’s goal is to continue leasing to the tenant, start with this approach before reducing or abating rent. Landlords may use one or a combination of several of these structures in their efforts to provide relief to struggling tenants. Ask your property manager if they would be willing to reduce your rent for these couple of months until you can get back on your feet again. Receive a free digital download of The Ultimate Beginner's Guide to Real Estate Investing. Review all the important terms: the lease structure, landlord and tenant responsibilities, critical dates, rent escalations, the guaranty, security deposit, etc. to them with a proposal that will be a good one for you. You also want to calculate the rent-to-sales ratio as a measure of tenant health. Recently, a couple of our tenants are asking for rent reduction due to overall market rental being soft. There can be many reasons for asking for a reduction in rent such as low income, more tax, etc. Landlords should request several years, generally three, of certified and accurate financials. Should You Buy, Sell, Or Hold Commercial Real Estate Right Now. As landlords, we have to remember that our tenants are our livelihood. Then, A rent reduction agreement or order must be lodged with Consumer Affairs Victoria before tenants and landlords can access the rent relief grant. when they tell you what they have in mind, you can either accept it Those phone calls or emails from tenants are dreadful, but inevitably, it is part of the business. when you finally call them back on the phone, it’s all about what So with this in mind, how should you then respond to this request? If you can afford to pay your rent, you should pay it. Assignment/Subletting: In the event of an assignment or sublease, the rent relief should be eliminated. Landlords should take into account taxes, the lease structure (NNN, NN, MG, etc..) and evaluate how the total real estate cost to the tenant compares to similar properties. Our tenants have asked for a 20% rent reduction because the flat they are renting needs maintenance work to the exterior. This article seeks to describe the most effective and most common strategies landlords can implement to handle these situations while maintaining the financial stability of the asset. Subscribe today and get the Oct/Nov issue delivered to your door! The following are typical rent relief structures. For example, a landlord may want to tighten up language relating to the repair and maintenance responsibility of the HVAC or roof. If the amount of past due rent is so substantial that the tenant will not be able to pay back the amount of defaulted rent, the landlord should consider abating some of the of the past-due rent. about this, and then I’ll get back to you.” This will then allow The If an attainable plan is not created and defined, then the tenant likely will never get out of default. Without them and their rent payments we would have nothing. A rent reduction works the same way – you need to agree on what the temporary rent is, and for how long the reduced rent is in effect. PasswordUse at least 8 characters. Send your landlord/property manager an email with links to other comparable properties in the area. You may consider requiring the following: Landlord Termination Right: By offering rent relief, the landlord has the ability to terminate the lease at any time with 30 or 60 days’ notice. This is currently a fast changing situation and we are endeavouring The grant is a one-off payment of up to $3,000 available to tenants who are experiencing financial hardship due … in keeping this in mind, when that phone call comes, be Best Time To Ask For Rent Reduction Finally, the tenant should consider the timing for asking for lower rent. “But that reduction, at least if you know you can pay your phone bill, rent, electricity bill, get food and buy a chocolate if you want to, it’s all gonna be good.” Here is a sample letter asking for lower A landlord cannot serve a section 21 notice in the first four months of the tenancy in England – but there is no minimum length of AST. doing good and they can pay you your rent, you become even more So if a tenant is in trouble and needs help from the landlord, it would be helpful if the tenant cooperates with the landlord and supports the request for a rent reduction with some financial data. Additionally, landlords may consider converting the past due amount into a loan payable over time. I have a great regard for you as a good tenant. Review Tenant Financials: Landlords should evaluate the tenant’s financial performance. later give you a counteroffer that may still be asking too much of We have kept our rent fairly low over the years. We are a small landlord in SF. Not many people should be moving house right now, but if you are granting a new tenancy and you want to offer a reduced rent during the Covid-19 crisis, you could grant a short fixed term (say three months) and then review the situation at the end of that term. Start analyzing real estate properties, we do the math for you. This strategy would require the use of a promissory note that would be cross-defaulted with the lease. Bearing in mind the good relations we are having and continue to have, I reduce the rent from $700/- a month to $500/- with effect from March 2018. 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