THE great summer rental meltdown is back again - it's an annual event.
The usual suspects have been unable to control their holiday budgets, resulting in the consequential surge in applications to mediation and tribunal.
Property managers and investors know it is coming and brace themselves. More importantly, some plan to reducethe possibility using a range of strategies.
My favourite is suggesting to a tenant that they pay an extra $10 a week so, after 12 months, they have about two weeks' rent in credit. That works well for several tenants who have large family gatherings to cope with at Christmas. Other landlords use Christmas gift baskets or Christmas hams. Rent holidays are popular too.
The increasingly depressed sales market keeps sending more houses into the rental pool and, once again, owners in that situation are having to grasp the reality of supply and demand. My favourite investment philosophy of "cost doesn't equal value" becomes increasingly relevant.
For example, I went to a fantastic house in early December, which had been on the market for 10 months with three different agencies. The owners had spent squillions renovating and creating a real beauty, but is was still only a two-bedroom home with one bathroom - and that largely determines its rental value. Tenants don't care about the cost of the carpet and wallpaper or state-of-the-art bathroom taps and shower. My appraisal was about $150 a week
below their expectations.
No property manager is going to spend time and effort trying to achieve the unachievable, so the owners have spent more money advertising it themselves - at the figure they wanted - and, you've guessed it, it's still unlet.
Sorry to remind you, but winter is on the way and the www.hotswap.co.nz scheme from Bay of Plenty Regional Council is proving very popular. Landlords with vacant, unheated houses would be well advised to take look at the offer.
Richard Evans, of Rotorua Rentals, is the chairman of the Real Estate Institute of New Zealand property management group
