Strange times have the tendency of throwing up unexpected challenges and these are certainly strange times.

We are only starting to feel the effects of the coronavirus pandemic. As to how the next few weeks or even months will unfold, it is simply too early to
tell.

 

For the time being, we encourage landlords to take stock in order to have a good understanding of your various rental income streams. Some will be more
at risk than others. For example, incomes from government-backed/social housing tenancies are less likely to be disrupted than incomes from private
renters working in the hospitality industry. Having this awareness at the early stage of a likely slowdown puts you in a strong position to mitigate
your cash-flow risks. As many seasoned investors who have gone through previous economic crises would tell you, in times like these, cash-flow is well
and truly king.
 
Some sensible things to do at this stage include
  • Check and confirm your loss of rent coverage;
  • Speak to your bank or broker to arrange for a flexi facility;
  • Get a preliminary understanding of what it would take to go from a P&I loan to an interest-only loan;
  • Open up a dialogue with your tenant and encourage them to front-foot any potential cash-flow issues/pain points with you (instead of burying their
    heads in the sand);
  • Get on top of addressing existing arrears if you haven’t already; and
  • Be open to either granting a temporary rent reduction or an alternative rental payment schedule to give your tenant some relief.
To be clear, a temporary rent reduction or alternative payment schedule is not suitable for everyone. In no way are we putting these options forward as
a...