For some readers, I wrote before that if my tenants are really in trouble because of COVID-19, I will provide them 50% rental discount. I meant for the good tenants. Not for all tenants. Of course, they will need to provide some proofs that they really need that discount. Now, what happens if the tenant is crying wolf? What could be the action of the unit owner? This is where that power balance between the owner and the tenant comes into play. Briefly, it’s about who needs who more?
Tenants’ negotiation POWER. If the tenant could easily get another unit within the same development, then of course his negotiation power will rise and hit the roof. Alternatively, if the tenant could rent another unit at another nearby development which meets all his requirements, then of course his negotiation power would also rise and hit the roof. Now, what if the tenant MUST have that unit and is currently renting the unit for a very low rate versus all other similar units within the development?
Owners’ negotiation POWER. If the owner could NOT get another tenant easily for his unit, his negotiation power is likely to be low. He better give discount in rental for now. If there are many other similar units and the rental is similar or even lower, then the owner’s negotiation power has also diminished. He may have to agree to some rental reduction especially during the current period where it seems that businesses have been hit hard due to closure of offices. Now, what happens if the owner knows that his unit has been rented out a low rate versus every other units within the development?
Are there other units? Whether the tenant was renting at a low rental or the owner was renting out at a low rental, the power will shift to the owner as soon as he understood that similar units may not be available. He may choose NOT to provide any discounts. The tenant may give a warning that he may move out. Situation will quickly turn into a bad one. The owner may tell the tenant to give notice and move out…
OH DEAR, ending soon. The tenant may now argue that he still have a tenancy agreement until XXX date. If the situation could still be salvaged, then perhaps both will come to an amicable agreement. Win-Win for both parties. Else, that’s the end of the tenancy. Tenant will have to find another unit somewhere and the owner will advertise for a new tenant. This happens all the time, whether or not there’s a COVID-19 pandemic going on.
BE PROFESSIONAL. This is why tenants should also be professional and not just the owner / landlord. This is also why whether you are a tenant or you are a landlord, do sufficient research before trying to push the other side to accept what you are offering. Do not be misled into thinking that the power is now with the tenant / buyer, so all these sellers must be desperate like crazy. There’s always that limit / balance which both sides would have to adhere to. There has never been such a thing as a total buyers / tenants market.
There are definitely owners who still refuse to rent to you if your rental request is plainly too low. Would I rent out if the rental gives me a negative return? Yes, I may because of current situation. However, would I reject any tenant who is unreasonable? Yes, I would as well. I think some owners / landlords are also like me… Happy understanding and may both sides get good people; tenants and landlords.
Next suggested article: Renting is cheaper today versus property price, why did this happen?