The first case of COVID-19 in New Zealand was reported on 28 February 2020. As of 6 May 2020, the country had a total of 1,488 cases and 21 deaths. After this, the situation in the country escalated much quicker than expected.
New Zealanders had spent weeks watching from afar as the virus spread through China and Europe with a lot thinking that age old kiwi attitude of “we will be right down here”. But COVID-19 hit us, and it hit us hard.
Less than 4 weeks after the first case was reported, the country got put on hold
when it entered a nationwide lockdown at 11:59pm on the 25th of March which
remained in place for more than 4 weeks.
Effects on the NZ Rental Market
On the 23rd of March, the Government announced a freeze of rent increases and protections against tenancy terminations.
Tenants were being advised to not move houses during the lockdown. If they had given notice to leave their rental property, this could be withdrawn. If their landlord had already issued a rent-increase or termination notice that was going to come into effect after the new rules came into force it would have no effect.
Landlords were only able to terminate existing tenancies when very limited and specific reasons applied.
These reasons are where the tenant:
● Substantially damages the property.
● Assaults or threatens to assault the landlord, their family, or the neighbours.
● Abandons the property.
● Engages in significant antisocial behaviour.
● Is 60 days behind in rent, which was increased from 21 days (and the Tribunal will need to take into account fairness and whether the tenant is making reasonable efforts to pay the rent).
Our Response to Covid-19
Rental businesses did not fall under the list of essential services so when New Zealand was under Alert Level 4, landlords and property managers were not allowed to hold in-person rental place viewings or inspections.
Before lockdown took effect, our team went to all our vacant properties to conduct video
walkthroughs. This allowed potential tenants to virtually tour the house during lockdown. While tenants could not move during level 4, this allowed our property manager to sign up tenants during the lockdown to move in at level 3, minimising downtime for our landlords.
We had a small number of tenants reach out to us as they were about their struggles during the lockdown period and in some instances were able to come to agreements with landlords. But for the majority of our tenancies, it was business as usual.
During the lockdown period and into level 3 we have managed to keep our arrears very low, with only 2 of the 279 tenancies we manage being more than 3 days in arrears, and no tenants are more than 6 days in arrears. This far exceeds both the average around the country and our expectations.
At level 3 there some restrictions remain in place, but property managers are able to perform in-person viewings and inspections while maintaining social distancing rules. This has been great for both us and our landlords as our property managers are allowed to complete entry condition reports and pass keys on to new tenants so they can move into our vacant properties.
New Zealand had been experiencing record high rents prior to the pandemic. We expect average rents to decrease around the country for at least the rest of 2020. A lot of students have returned home, people are not moving to NZ from overseas and less people will be starting new jobs. We also predict a larger than usual level of supply as people remove their properties from the short term letting environments such as Airbnb.
However, it is well known that property is a long term investment, and things will improve sooner than later. Come Summer when students are flocking back, the economy is in recovery mode and the kiwis that returned home during the pandemic are moving away from living with friends and family, we will be ready for them.