Renters’ market: Landlords forced to cut asking prices

Saturday April 11, 2020 Written by Published in Economy
Mario Caffery doing some work at home. 20040949 Mario Caffery doing some work at home. 20040949

The notoriously expensive Cook Islands home rentals market has been turned on its head, as workers and tourists leave.

 

A few hours of your time in the plantation, is all a homeowner is asking for, and you get to live in a rental property for free.

Rarotonga home owners have had to reduce their accommodation prices on both long-term rental properties and short-term accommodations, due to the Covid-19 crisis as well as the closure of our borders.

And for property owner, Mario Caffery, he is now feeling the pinch of it.

He is now on the Government subsidy package, and cannot afford labour support to help maintain both his long term and short-term home accommodations.

He says, even though he does work on his yard and landscaping himself, work would be done quicker when there is someone to help.

“I’ve always wanted time to plant crops that we import but can be grown here like citrus, avocados etc. Now is the time I think,” he said.

Minister for Finance Mark Brown had earlier said that many would struggle to pay rent and landlords like himself needed to cut rents and that everybody was aware of the economic, social havoc caused by the pandemic.

And now, Caffery is looking for a tenant who can stay in his one-bedroom, fully self-contained and furnished apartment at Avana Valley Heights in one of his four apartments.

This tenant will live here for ‘FREE’ until the end of June 2020.

Included for free is Moana TV, power, gas- the normal rent is $30 a week.

He said the rent can be negotiated for longer term and will depend on how the Covid-19 pandemic ends.

He said he needs help and can’t afford it at the moment.

Just a bit of help with the land, plantation, home yard work, general maintenance is all Caffery is asking for a few hours a day.

“I can’t afford it at the moment because I don’t know how long this dry period will last.”

He said he has four dependent children and has to spend wisely as this crisis could last for months and it may be up to a year before any sort of recovery income can be seen.

“We have an apartment which is not being used and if someone needs help and we can help, glad to help out. Easier to just let it out for free to someone who will appreciate the trade.”

He said for short term accommodations there have been a huge reduction in rent and for long term, - everyone is feeling the pinch on that.

“There are some foreign workers here who are homesick, desperate to go home but can’t go anywhere at the moment.

“Landlords have mortgage commitments and find it difficult. Well so do I, and Bank of the Cook Islands have given us a three months grace period.

“I can try and make the interest payments for a couple of months. But then, back to renegotiating with all parties. But for now, until June, let’s try and help each other just as banks, TAU, Vodafone and our employers have helped us,” he added.

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For property owners Paul and Shona Lynch Lynch, like many short-term tourism accommodators, their local family business, Cook Islands Holiday Villas, have encountered very significant challenges.

“We have a 100 per cent loss of bookings and income. But we are keeping our 6six staff employed and busy,” he said.

He said now they are turning some of their nine Villas onto long term rentals.

“We are realistic and can now only charge a low weekly rent that is equal to what our daily rate was.”

But this won't cover loans and reduced costs but it's a small blessing, Lynch had said.

“We have to all be grateful to God, and to support the Government efforts in this crisis. We are confident- that especially if we can remain Virus free- then our local businesses and nation will bounce back more sustainable, cleaner and stronger.

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Short term and long-term rental property owner Mereani Talbot said they were quite lucky because they managed to get long term rentals prior to the Covid-19 and border closure.

She said everyone’s situation was different and for them they rented one unit at $100 per night last year but because it was quite in January and February this year, they opted for long term at $200 per week.

“People are holding on to their money and we are no different. We are not able to clear any bill's in full yet and only paying what we can.

“Yes, there has been a huge reduction in rent and online there are some amazing places being rented out at low rental amount.

“It's pretty ridiculous but it's what needs to happen if you want them rented. The main issue will be, how will things improve after covid19.? It’s starting all over again and waiting for tourism to come back. “How long will that take to get back to normality?” she asked.

 

Cook Islands Chamber of Commerce, Fletcher Melvin said that the reduction of rent has been spoken about at the Private Sector Task Force and between them and government.

He said that at the moment they are seeing a natural decrease in rents due to an increase of available properties who were short term and now looking to go long term.

Melvin said there are already landlords who have given decreases to their tenants.

“Our advice to tenants is to speak with the landlord first and simply ask for a reduction. We have also advised landlords to be prepared to drop rentals to allow them to pay mortgage obligations only as this may reduce the rent enough for both parties to be happy.

“The tenant should be prepared to explain what their financial situation is and possibly provide a letter from their employer as proof of reduction in hours and salary.”

Melvin said the main message is to be able to talk honestly with each other.

“We do not see why any land lord would want to increase rentals due to the tough times but if they did they could send the complaints to the Price Tribunal or Internal Affairs.

“We are also prepared to mediate between landlords and tenants if they still could not get a resolution,” he added.

 

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