Tenants and Covid-19 Legislation

March 30, 2020

9/4/20 – Update.

This news article in the Sydney Morning Herald today suggests that a significant number of tenants are “having a go”, thinking they can’t be evicted.

Real Estate.com.au posted this accurate article, aimed at Tenants. If you’re time poor (who isn’t!) then the relevant bit from the post is this:

“If you don’t think you’ll be able to pay rent due to your circumstances at work, then you need to come to a reasonable agreement with your landlord.

Your property manager and/or landlord will ask you to fill out a form, which will allow them to make an assessment of what action needs to take place, whether it’s a rent reduction, rental freeze or deferral of payment.”

Which is EXACTLY the approach we have taken from the outset here at Caloundra City Realty.

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On 29/3/20, the Prime Minister announced pending rules that prevent Owners/Landlords from evicting tenants suffering financial hardship as a consequence of the Covid-19 pandemic.

Where tenants have reasonably established financial hardship, and are asking for rental relief, the options to negotiate become very constrained. Prior to the announcement, Owners could evict a tenant for non-payment of rent, and attempt to recover the monies as a debt (albeit with great difficulty).

With the removal of the right to evict, the options that present include-

  • Take what’s on offer, but… – where a tenant can only pay a reduced rental, accept that offer…but consider this as a down payment on the rental debt. That is, not alter the lease* in respect of rental. The forgone rent accrues as a debt to be repaid by the tenant.

 

  • Negotiate another rental rate, and forego any future right to claim the difference as a debt. This is effectively an alteration of the rent required to be paid under the lease. We would not recommend this, as there could be insurance implications. For Owners that do want to permanently forego the difference between the “old” rent and the new concessional rent, consider foregoing the debt at some future time.

 

  • End the tenancy by varying the end date of the lease, so the tenant may vacate without being in default for a “Lease Break” (all other obligations of the Tenant remain in force)

In the first scenarios, we would recommend that any agreement be reviewed every month.

*Note: if your tenant is not on a fixed term lease…say it expired…then they are on a Periodic lease. Both are still considered a lease for the purpose of this discussion.

About Landlord Protection Insurance:

The right to claim requires owners make their best endeavours to mitigate their loss (as is the case with all insurance cover). This means serving the appropriate breach notices, vigorously chasing down the tenant for payment etc. We are cannot provide you any guidance on what your insurer might say about the Covid-19 eviction rules.

About assistance for tenants:

 

  • Digging into super is a Federal Government concession offered to the wider community. We cannot suggest to tenants that they use their super, as we are not licenced as financial advisors and would therefore be in serious breach should we suggest this to tenants.

 

Caloundra City Realty

Article by Caloundra City Realty

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