July 28, 2016
Feeling the Pressure: Rent Renewals in a Tough Market
With levels that have not seen in two decades, Canada’s 35 larger centres saw the average vacancy rate in privately initiated purpose-built rental apartments increase to 3.3 per cent in October 2015, from 2.8 per cent in October 2014.
The purpose-built market is red-hot, and the new stock is playing a strong role in increased vacancy signs on buildings.
The exception to this is Vancouver, where rental housing is in tight supply and demand is booming. Yet, even there in CHMC’s first survey of rental turnover rates, which tracks the number of purpose-built rentals that have changed hands in the last 12 months, 19% of units in the city centre had new tenants. And, once you move to the suburbs, turnover rates increase.
Add to this a booming condo market, with some owners renting their investment to pay for the mortgage, and the result is a lot of housing options. Generally speaking, condominiums have a lower vacancy rate as they are typically newer and tend to offer a greater range of amenities than purpose-built rental apartments.
Knowing that it is a renters market, there are reports of renters even asking for price reductions. However, most property managers won’t have to worry about reducing rents. As with the housing market in many cities, rents are rising across Canada. CHMC stats show the average rent for one- and two-bedroom apartments was about 2% higher in spring than a year earlier.
Upping Renewal Rates
Despite the rent increases, landlords and property professionals are feeling the pressure to ensure lease renewals and continue to fill their available multi-residential units. Instead, more and more incentives in the form of bundled services as well as community-based perk are being offered.
To ensure the capture of as many renewals as possible, there are few simple steps:
- Ask early – Know who is staying and who is going as soon as possible, with a minimum of 120 days.
- Practice “extreme customer service” – Organizations with a stronger customer focus tend to maintain longer relationships with residents.
- Create a community – Promote management-hosted BBQs, movie night or planting a community herb or vegetable garden, as these events help bring the building together and create a strong bond to both neighbours and location.
- Stagger leases – While it won’t change who is coming or going, it does help give your team more breathing room and time to file the lead pipeline.
- Invest & communicate – Be proactive about your maintenance, including freshening up common areas and increasing curb appeal. Don’t forget to announce the upgrades in your newsletter and to new prospects.
In our experience, clients who use a property management tools that allow residents to “self serve” their needs, for example, getting a record of rent payments, or placing a maintenance request through their phone, have a higher level of customer satisfaction.
When it comes to rental properties, residents are in a position of power. They aren’t required to stay once the lease is up. But if life on your property works for them, your tenant will have every reason to stay!
To learn more about how you can increase renewals and streamline your management processes, sign up for your free account today or give us a call.