Need to know
- NSW and Victoria are throwing $440m and $500m at the problem, respectively, but other states and territories have been short on specifics
- States are encouraging landlords to negotiate rent reductions with tenants who've lost their incomes in good faith and offering tax breaks as an incentive
- Per agreement reached at the National Cabinet level, a six-month ban on renter evictions is currently in effect, with state tribunals poised to moderate tenant/landlord disputes
With job losses brought on by the coronavirus crisis ratcheting upward and unemployment predicted to reach double digits, the number of people who can no longer afford to pay rent is also rising daily.
Is help on the way?
In late March, state and territory governments (in the form of the National Cabinet) agreed to a six-month moratorium on both commercial and residential evictions for people who've seen their incomes wrecked by the pandemic.
On 7 April, the Prime Minister announced that the Commonwealth was delegating the matter: "Residential tenancies will now be dealt with directly by each of the state and territory jurisdictions."
The national agreement means that any landlord attempting to evict a tenant who can't pay rent as a result of the pandemic will face additional hurdles until at least November 2020.
We will not allow anyone to be evicted because they can't pay their rent as a result of this crisisQueensland Deputy Premier Jackie Trad
But at this point the details are still hazy in most states and territories.
The key ingredient appears to be that landlords act in good faith, including by contacting lenders and asking them to waive or reduce mortgage repayments to make a loss of rental income sustainable.
If landlords and tenants can't come to an agreement on lowering rent or putting it on hold, it will be up to a state tribunal to sort it out.
While most jurisdictions are still working out the details, both NSW and Victoria have a plan in place and the Queensland government has also offered some specifics about its new COVID-19 renter protections.
On 9 April, Queensland Deputy Premier Jackie Trad said "we will not allow anyone to be evicted because they can't pay their rent as a result of this crisis".
NSW unveils its plan for renters in arrears
On 13 April, the NSW government announced it had committed $440 million to its renter relief package for both residential and commercial tenancies, though the plan has yet to pass in the state parliament.
The money would go toward helping households that have lost at least 25% of their income (and businesses which have lost at least 30% of their revenue) due to the pandemic.
Here's how the NSW relief package is meant to work, according to NSW Fair Trading:
- Renters whose ability to pay rent has been impacted by the coronavirus outbreak will be protected by an immediate 60-day ban on evictions notices – it means you can't be kicked out for not paying rent for that period.
- Landlords will be required to negotiate rent reductions with affected tenants "in good faith".
- If an agreement can't be reached, landlords can issue termination notices and apply for eviction notices with the NSW Civil and Administrative Tribunal (NCAT) after the 60 days, but only "if it is fair and reasonable in the circumstances of the specific case".
- NCAT will decide whether or not the eviction can go ahead.
- Whether or not renters will have to eventually pay back the amount their rents are reduced by will be "subject to negotiation between the tenant and the landlord" (with access to Fair Trading's dispute resolution process if required). The back rent will not automatically be waived.
Who is eligible for residential renter relief in NSW?*
- One or more rent-paying members of a household who have lost employment or income (or had a reduction in employment or income) due to COVID-19 business closures or stand-downs; or
- One or more rent-paying members of a household who have had to stop working or reduce work hours due to illness with COVID-19 or due to COVID-19 carer responsibilities for household or family members; and
- The above factors result in total household income (inclusive of any government assistance) that is reduced by 25% or more. (The 25% reduction is assessed on income after tax inclusive of any government assistance, such as the new JobKeeper payments.)
*Source: Tenant's Union of NSW
States are encouraging landlords to negotiate with coronavirus-affected tenants on rent reductions. In exchange, landlords could get breaks on land tax.
Victoria chips in $500m
On 15 April, the Victorian government announced it would introduce emergency legislation in parliament on 23 April that would earmark $500 million to help both renters and landlords deal with the economic fallout of COVID-19.
The Victorian package has four basic elements:
- A six-month ban on evictions
- A pause in rental increases for six months
- Land tax relief for landlords
- Rent relief for tenants.
"Tenants and landlords who struggle to strike a deal over rent reductions will be given access to a fast-tracked dispute resolution service, with Consumer Affairs Victoria or the Victorian Small Business Commission mediating to ensure fair agreements are reached," the government says.
If a landlord allows tenants impacted by coronavirus to pay less rent, they'll be eligible for a 25% discount on their land tax, while any remaining land tax can be deferred until March 2021.
These are unprecedented measures – but we are facing an unprecedented crisisVictorian Minister for Consumer Affairs Marlene Kairouz
Victoria says it will also establish an $80 million rental assistance fund. To be eligible, renters will have to register their revised rental agreement with Consumer Affairs Victoria or have gone through mediation, have less than $5,000 in savings and still be paying at least 30% of their income on rent.
"These are unprecedented measures – but we are facing an unprecedented crisis," says Minister for Consumer Affairs Marlene Kairouz. "With this support, we'll help tenants cover the rent and keep a roof over their head."
Queensland plan still taking shape
While the workings of the Queensland plan are less specific than the NSW and Victoria approaches so far, the state has gone on record to commit to the following:
- If an agreement for COVID-19-related rent reduction can't be reached, there will be compulsory conciliation between tenants and landlords through the Residential Tenancies Authority.
- Property owners must offer tenants a six-month extension if their lease expires during the COVID-19 crisis.
- Tenants who can't pay rent due to the crisis will be allowed to end their leases early.
- Rental grants of up to four weeks rent, or a maximum of $2000, will be available for eligible tenants.
Making the case to your landlord
In other states and territories, the old rules appear to be still in place for the time being: you can be evicted for not paying your rent.
But it's important to understand that your landlord or rental agent can't evict you, only a state tribunal can. And only a sheriff can actually escort you off the premises.
If you've lost your income or seen it significantly reduced, we recommend you make a case to your landlord for lowering your rent or putting it on hold while the pandemic is underway.
Tenancy organisations across the country are making the same recommendation.
Landlords have no legal obligation to do this, but for many it may prove a less expensive option than trying to find a new tenant in the current economic climate.
What questions can landlords ask renters?
Some real estate agents and landlords have been telling their tenants to access their super if they're short on cash, something that is not recommended and that landlords have no right to request.
(In fact, someone without a financial services licence giving this kind of financial advice is probably breaking the law and could face up to five years in jail, ASIC has warned.)
Others agents and landlords are asking for documentation without legal authority.
We know of one case where a landlord asked to see a renter's bank statement to assess whether she deserved a rent reduction. The woman had been renting the house for 18 years.
Agents and landlords are asking for documentation without legal authority … A landlord asked to see a renter's bank statement to assess whether she deserved a rent reduction
Renters have no legal obligation to provide such material, but in extraordinary circumstances like these a landlord or agent would understandably want to see some evidence of financial hardship.
We recommended you provide information on your terms. Notice of job loss and a letter outlining your financial position are two options.
NSW Fair Trading says the following should be enough to make your case:
- Proof of job termination/stand-down, or loss of work hours
- Proof of government income support
- Proof of prior income.
How will property owners be compensated?
What about property owners who have to meet mortgage payments on their properties and depend on rental income to do so?
A number of ideas have been proposed, including the land tax amnesty for property owners that is part of the NSW and Victoria packages.
As part of the 13 April announcement from NSW, Treasurer Dominic Perrottet said the $440 million would help fund land tax waivers or rebates which would be split between business and residential landlords.
For residential landlords, a 25% land tax rebate would be available if that saving is passed on to struggling tenants
For residential landlords, a 25% land tax rebate would be available if that saving is passed on to struggling tenants.
NSW Fair Trading says the 60-day stop on eviction notices "will allow time for tenants to receive government income support and for landlords to negotiate a reduction or waiver of mortgage repayments with their lender".
After the 60 days in NSW, a tenant who is still unable to pay full rent due to COVID-19 "can only have their tenancy terminated on the basis of rental arrears if the landlord has attempted to negotiate reduced rent in good faith but the tenant has failed to do so", says NSW Fair Trading.
Stock images: Getty, unless otherwise stated.