Our industry is better placed than most to ride the Covid-19 crisis

Routine Inspections must stop immediately to protect all

A few years ago, whilst heading the Property Brokers Property Management division, I remember attending the annual Barfoot and Thompson conference which, as always, was an extravagant affair. This year was a little bit different as Barfoot’s was celebrating its 90th anniversary. Whilst people met and mingled taking their seats, in the background a video on the big screen of the history of the company was playing. As others talked in groups, I watched the video and my attention was grabbed instantly when it came to the great depression. The narrator in calm deep voice stated, “In the 1930’s Barfoot’s nearly had to close its doors because of the great depression, but rentals kept it going”.  It was at that point, I realised the importance of a strong and robust rent roll.

We are entering unchartered and choppy waters. Nobody really knows how bad it is going to be. Both economically and in terms of the human cost. I, for one, am greatly concerned about the future. People may criticise me for being too negative or even scaremongering, but for me, the debate about the removal of 90-day no-cause terminations seems utterly irrelevant in terms of what we could be facing. I really do hope I am wrong and I would gladly accept the criticism if I am, but what we now need to adopt is a siege mentality at least for the next six weeks.

Cancel Routine Inspections. They can wait.

There are approximately 250,000 properties professionally managed by our industry, of which many will be inspected on a quarterly basis. This means there could be between as many as sixty to seventy thousand routine inspections being carried out every month by approximately 2,000 to 3,000 Property Managers. Surely, the right thing to do is to postpone all routine inspections, at least till the end of April.

To allow our industry to walk into people’s homes is simply not worth the risk. No one in their right mind is going to complain if an inspection is postponed by a couple of months. The well-being of tenants, Property Managers, and the wider community as a whole must come first. 

We will also have to adopt policies as to how we maintain these properties and communicate with their occupants. Things will still break and will need fixing. This is where technology can certainly help. Using videos to assess repairs and maintenance and being able to communicate using maintenance applications such as Tapi will allow clear communication between all parties. We still have to keep our tenants warm and dry living in well-maintained properties, particularly as winter approaches. Areas such as South Auckland which have issues around overcrowding can be particularly at high risk.

Our industry can survive this, but it will be tough.

Yes, Healthy Homes and RTA Amendments are important to our industry but those discussions can be put on hold for the time being. What we have to do is batten down the hatches and ride this storm out. So how will our industry react to this crisis?

Better than most industries actually, though it will not be easy. 

One thing we can learn from the lesson taught to us by Barfoot and Thompson in the great depression is that Property Management keeps companies going in moments of distress. People will still need homes and will have to pay rent and people will need these properties looked after. Though I do expect rents to drop in the long term as the true economic impact of this crisis is realised. 

Thousands of jobs will be lost in the wider economy, particularly in travel, hospitality and tourism. Small businesses will also suffer and this will put a strain on rents as some people will likely default on rent payments. This is where strong leadership is required and we must foresee this issue.

If interest rates are to be slashed which will help lower mortgage payments, even mortgage holidays, then landlords should pass these savings onto tenants. That is unlikely to happen but the Government may intervene. I would not be surprised to see rent controls established and, under the current circumstances, this may not be a bad thing. Giving tenants rent holidays would be a disaster to our industry and this cannot happen.

We are all going to have to make sacrifices and take a ‘Wartime mentality’ to what is potentially the greatest global crisis since World War Two.

Keep busy, keep calm and carry on. Just differently that’s all.

So what will we do if people do not move and inspections do not happen?

We will see more Property Managers working from home and it could be the perfect time to tighten up your business. So many companies lack robust policies and procedures and this could be the perfect time to review and even implement them. It will also make us innovate and adopt new technology to make us manage properties without being so hands-on. 

Tenancy inductions could be done remotely with digital signatures being available on Tenancy Agreements. 360-degree video tours may become the norm as a way of marketing and viewing a rental property so you do not have to have groups attending viewings.

Even Tenancy Tribunal, which has long been a dinosaur when it comes to modernising, can introduce remote Tribunal hearings with evidence being emailed through. Disputes will still happen between landlords and tenants and they will need to be resolved somehow. The longer we can ride out the storm, the stronger we will be when we come out the other side. And come out of it we will. When we do emerge from the other side we will hopefully see a more empathic and understanding society. 

In recent times, I have become dismayed as to the constant aggressive nature that both landlords and tenants have been guilty of during debates around changes to the Residential Tenancies Act. Ultimately, we all share this great country and we all have equal rights. 

There will be victims, both in life and in business. Do you think I haven’t sat here and wondered what could happen to Real iQ? I would be lying if I said I didn’t. However, we will do what we can and adapt and focus on as getting as many Property Managers qualified as we can and we will come up with creative ideas to support our industry. It will just be done differently that’s all. I do have hope that we can weather this storm and I fear we will be far better to do so than our real estate compatriots. I have a genuine concern that the longer this continues, the harder it will become for them. Many properties that do not sell may even find their way to the rental market which will lead to a greater supply of rental property being available.

For those focusing on short term letting such as AirBnB, forget about it as travellers virtually disappear from the market place. Many of these will return to the rental pool and this will help increase the supply of rental property and will help control rents.

My final message to the industry that I love is this. Please look after yourselves and your loved ones, be vigilant and don’t feel pressured into doing something you do not want to. Hopefully, it will pass quickly and we can all breathe a huge sigh of relief, but for now, stay strong, keep calm, keep focused and of course carry on!

Good luck everyone.

David Faulkner

Privacy Preference Center