Melbourne Property, finance and property management update May 2020 with Stuart Wemyss

Jarrod McCabe (on left), director, Wakelin Property Advisory, provides an update on property market conditions, how the transaction process is evolving and how the market is adapting to the coronavirus pandemic.

Stuart Wemyss of ProSolution Private Clients (on right) reports on finance considerations such as lending accessibility, approval time frames and cost of borrowings, plus, in these straitened times for some landlords, potential cash flow strategies including accessing government assistance.

Jordan Telfer (centre), Wakelin’s client liaison manager, discusses property management and the state of the rental market in light of the Victorian Government’s recent support package.

PROPERTY MARKET OVERVIEW (Jarrod) 2 mins 26 seconds

– Market developments since covid-19 hit, circa early March
— demand and supply elements
— examples from inner Melbourne market
– Have asset tastes change due to home working etc
– Least impacted assets
– Most impacted assets
– Property market outlook for Melbourne.

FINANCE MARKET OVERVIEW (Stuart) 11 mins 20 secs (and financial questions from 42 mins 06 secs

– Loans, interest rates, pre-approvals, Re-financing, delays etc
– Based on recent March data, lending volumes up 17.5% over the year – mainly driven by owner-occupiers.
– Loan volumes likely to fall dramatically from May onwards and why.
– Bank approval times have blown out. Offshoring. Volumes in regard to interest rates, repayment pause, etc. – have eating up a lot of resources.
– Lenders are focusing on Covid affected industries e.g. airlines, retail, hospitality and tourism. Very difficult to get finance.
– Valuations – desktop or kerbside – very few full valuations. No issues yet but watch this space!
– Westpac has reduced LVR’s – for LMI waivers.
– No reliance on short-let rental income (AirBNB).
– Rough 3-year fixed rates start at 2.20% for owner-occupier (versus 2.80% variable) and 2.70% for investment (versus 3.70% for variable).
– Interest rates are expected to be flat for 3 years. We know the variable rate floor, so deciding about fixed is easy to do.

Overall, when it comes to finance during this period, you must be more proactive. Check in with your lender or broker often. Understand that approval times are very lengthy. Expect the lender to ask questions about impact of Covid.


– The Victorian Emergency Measures Act and new rules for tenancies
— No evictions from 29 March (some anti-social exceptions)
–Tenants in hardship can break lease without penalty — No rent increases before 29 Sep 2020
–Temporary rent reduction request by distressed tenants. Binding decision by arbitration if no agreement
— Landlords may be eligible for 25% land tax reduction plus deferral of bill until 31 March 2021
— Landlords may receive $2k rent-relief grant from gov if rent reduction agreed, documented and shared with gov, tenant contributes ≥30% of income, the tenant household income less than $100k pa, savings less than $5,000.

— the various government and non-parties involved in process
– How to negotiate a rent reduction
— typical reductions negotiated by clients at moment
– State of rental market and how to adapt
— demand and supply
— possibly change rental lease length
— undertake a refurbishment.

There is a deeper dive into rental issues in a second video, featuring the property management team from Nelson Alexander.

Note that there has been some conflicting messages from Victorian state departments (which has been acknowledged to us by Consumer Affairs) about whom is the ultimate beneficiary of the rent relief grant. From our enquiries we have established that the tenant is. The grant is transmitted from DHHS to the landlord or their agent, and then must be used as part credit towards the tenant’s periodic revised rent payment. It cannot be used to part compensate the landlord for the dollar gap between the old and new rent rates. Landlords must bear this in mind when negotiating a ‘sharing the pain’ revised rental agreement with covid-19-affected tenants.

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