Landlords (commercial and residential) will not be allowed to evict tenants who are unable to pay due to financial pressures caused by Covid-19. This moratorium is in place for at least 6 months, is changing frequently, and varies by state.
PropertyNow is committed to keeping homeowners and landlords up to date on the constantly evolving regulations and how best to handle these difficult situations.
Genuinely, some renters will be unable to meet all of their rent requirements; others may take advantage of the situation and landlords fear that they could go 6 months without rent and without the ability to evict. We’ll work through a few scenarios and some suggestions on how to manage the situation that is best for everyone.
Note that some homeowners will receive support from their landlord’s insurance to cover rental losses, depending upon how they deal with their tenant. See State specific resources below.
To start with, this moratorium on evictions only applies to tenants who are not able to meet their obligations due to financial distress as a result of the coronavirus crisis according to Prime Minister Scott Morrison.
Step #1 – Communicate With Your Tenant
Have a conversation with your tenant; see what their personal situation is – did they lose their job, have their hours been reduced. Empathy goes a long way – take a few minutes to ask about their family and themselves and find out how they are doing. Being focused strictly on business does not endear the tenant to you; ideally you have been engaged from the get go and this display of empathy will not appear fake.
Step #2 – Educate Yourself on Mortgage Relief Resources
- Land Tax relief may be available to landlords where their tenancy has been affected by COVID-19.
- Each state has their own frameworks to follow if tenants are late with rent.
- It is imperative to know what your landlord insurance will cover before you make an agreement with your tenant. It is unlikely that insurance will cover you if you agree to reduce, suspend or defer rent from a tenant. Some states do have programs in effect that will help defray your expenses should you decide to work with your tenant. See state specific information below.
- Property investors should also speak to their bank about getting a mortgage holiday – either pausing or reducing their monthly repayments.
Step #3 – Educate Your Tenant on Available Resources (and yourself as well!)
It is possible that your tenant may not be aware of financial options that are available to them during this pandemic. If you advise them of all possible options, you have a higher chance of obtaining rent from someone who previously did not have sufficient funds to cover the entire rent.
- The Government has passed legislation for the $130 billion JobKeeper Payment to keep more Australians in jobs and support businesses affected by the Coronavirus. Read more.
- A new Higher Education Relief Package will support workers who have been displaced as a result of the COVID-19 crisis and who are looking to upskill or retrain. It will also provide funding certainty to higher education providers. Read more.
- For local emergency relief providers search ‘Financial Crisis and Material Aid – Emergency Relief’ at serviceproviders.dss.gov.au. Please note provider details are updated regularly but may not be current at the time of your search.
- For financial counselling, including advice on managing debt, contact the free and confidential National Debt Helpline by calling 1800 007 007.
- Those on a low income may be eligible to apply for a ‘No Interest Loan’. For more information and details on how to apply, visit Good Shepherd Microfinance
- To test eligibility for income support payments including JobSeeker, contact Services Australia by visiting servicesaustralia.gov.au.
- There are a number of Government funded crisis and support services to help people during the coronavirus pandemic. Download a list of dedicated online and telephone-based services for people with disability, older Australians, carers and for people experiencing domestic, family or sexual violence.
Things that tenants need to know:
- Centrelink may be able to help with rent assistance in certain situations (those who already qualify for income support such as JobSeeker payment, Youth Allowance or the Parenting Payment)
- If rent is not paid, debt continues to accrue. Once the moratorium ends, eviction will be an option.
- Landlords have the right to keep a tenant’s bond to cover the rent.
- Rent owed beyond the bond can be pursued through debt collectors or file court proceedings, which could impact credit ratings
- There are privately owned tenancy databases (e.g. National Tenancy Database, Tica, and Trading Reference Australia) that real estate agents may use to screen prospective tenants. A track record of missing payments can mean a black mark on a future rental application, making it difficult to obtain a new lease.
Step #4 – Come up With an Arrangement
All states are suggesting that tenants and landlords work together first and foremost to come up with an agreed upon arrangement relating to rent.
- Reduce the rent
- Suspend the rent
- Payment plan
- Break Lease
- Final Option (no agreement possible)
Pros and Cons of each option (see state specific information below)
|Reduce the rent||Landlord continues to have some money coming in.||May not be eligible to claim loss of rent via landlord insurance.
Note this reduction is not payable by the tenant in future – that would be a deferral (see below).
|Landlords in states and Territories that are planning to Land Tax relief for tenancies impacted by COVID-19 (see state specific information below)|
|Suspend the rent (Rent becomes $0 for a specified period of time)||Should a landlord have a tenant who is otherwise ideal (e.g. has lived in the unit for years, pays rent on time, is quiet, etc.), this may be an option to consider.||May not be eligible to claim loss of rent via landlord insurance.This money is not payable at a future date.||Landlords with ideal tenants they’d like to help out.|
|Payment plan (Deferral)||Landlord continues to have some money coming in and the reduction offered during the pandemic is payable in the future.If you do need to evict the tenant in future, you are able to show the Tribunal that you made an effort to work with the tenant.||If a tenant was unable to pay full rent during the pandemic and does not receive any sort of external financial relief, there is a possibility they will never be in a position to repay that rent that was not paid.
Landlord Insurance provider MAY be more inclined to cover a portion of rent (e.g. the deferred amount).
|States offering to meet landlord efforts at deferring tenant rent|
|Break Lease – Landlord and tenant may agree to end a fixed lease early||Landlord is not stuck with a non paying tenant.||It may be difficult to get a new tenant during Covid-19.||A market or listing that has a high likelihood of getting a new tenant in the next couple of months.|
Step #5 – No Resolution Possible
If you need to evict your tenant, you’ll have to follow state procedures for COVID-19 related issues and use the free mediation service provided by the Tribunal or follow normal eviction procedures.
Note that the Tribunal will most likely not hear an application during the pandemic but you still need to make the application within the proper time frame and serve appropriate notices in order to keep within the guidelines and requirements of your Landlord Insurance policy.
State Specific Information
The Tasmanian Government has introduced a 120-day emergency period into its Residential Tenancy Act. The emergency period ends July 25 although can be extended by 90 day increments.
With these changes, tenants cannot be evicted for falling into rental arrears, however, landlords can issue a notice to vacate on the grounds of rent arrears when the period ends.
Leases can still be terminated during the emergency period if tenants agree or if the tenant or landlord make a successful hardship application.
- Any notice to vacate issued by an owner to a tenant is of no effect until 30 June 2020. This applies to a notice to vacate which has been issued to a tenant, where the tenant is yet to vacate, except:
- by agreement with the tenant,
- if it is a non-fixed term tenancy and the notice to vacate has been served prior to 3 April 2020 because the property is to be sold, or
- where the notice to vacate has been served due to the tenant using the property for an unlawful purpose, or
- in the circumstance where it is terminated for severe hardship by the Commissioner.
- An owner or tenant can also apply to the Magistrates Court of Tasmania to terminate the agreement as a result of violence or damage caused by wilful behaviour.
- According to the Tasmanian building and construction minister, Elise Archer, Residential landlords may contact the state revenue office if they are experiencing hardship and are unable to meet land tax payments.“The commissioner of state revenue will consider deferring any outstanding land tax until 30 June 2020 or may organise alternative payment arrangements,” and “No interest will apply to any outstanding 2019-20 land tax debt.”
Queensland will legislate a six-month moratorium on evictions due to rent arrears caused by Covid-19 and property owners will be prohibited from evicting a tenant if their lease expires during this pandemic.
Queensland is offering special rental assistance – a one-off payment of up to $2,000, paid directly to eligible lessors. To be eligible, you must have lost your job due to the pandemic and have applied to Centrelink for income support.
Applications close 5pm, 27 April 2020.
- Apply for a COVID-19 Rental Grant
- New COVID-19: Residential Rental Hub
- For Property Owners
- For Property Managers and Agents
- RTA’s General Tenancy COVID-19 special terms form (18D) to record any new agreements
- Residential Tenancies and Rooming Accommodation Act 2008
Australia Capital Territory
The government will provide a land tax and rates rebate to landlords of residential properties who reduce rents by at least 25 per cent for tenants impacted by COVID-19.
The rebate will be equal to 50 percent of the rent reduction, capped at $1,300 per quarter (around $100 per week), for up to six months. This will provide rental relief to impacted tenants of up to $200 per week.
The ACT government has put in place a short-term moratorium on evictions, temporary freeze of rental increases and prevention of blacklisting as a result of tenants being unable to pay rent.
Residential tenants and landlords may reach an agreement to delay rental payments if a tenant is not earning income. Any outstanding rent during this period will be a debt owed to the landlord but is interest free for the six months of the moratorium period.
Evictions will be banned for residential tenancies for six months, except in some circumstances, and rent increases paused for the same period.
If a landlord provides tenants impacted by coronavirus with rent relief, they will be eligible for a 25% discount on their land tax, while any remaining land tax can be deferred until March 2021.
Tenants who are unable to secure a rent reduction can enter a dispute resolution process overseen by Consumer Affairs Victoria, with binding mediation.
- Consumer Affairs Victoria – Coronavirus (COVID-19) and your rights
- Housing Victoria Rent Relief Grant
New South Wales
The government has introduced an interim 60-day stop on landlords seeking to evict tenants due to rental arrears if a person in the house has suffered financial hardship due to Covid-19, meaning a reduction of 25% or more in household income. Legislation will follow for a six-month restriction on rental arrears evictions.
Landlords can apply to the NSW civil and administrative tribunal to seek eviction if they are in financial distress at any time, and after the 60-day stop “if it is fair and reasonable in the circumstances of the specific case”.
Under the scheme, a landlord or managing agent must enter into negotiations with a tenant who is struggling to make rental payments, with dispute resolution by NSW Fair Trading.
Unpaid rent accrues as arrears during this period, but tenants will not be blacklisted.
- NSW Fair Trading six month moratorium on residential tenancy evictions during COVID-19
- NSW Fair Trading Renting and property
The Northern Territory government has recalled parliament to sit on 24 April to pass more coronavirus emergency legislation, including residential tenancy laws.
Attorney-General Natasha Fyles told Parliament that severe penalties would apply to both NT tenants and landlords caught taking advantage of emergency rental laws.
It is expected that there will not be a moratorium on evictions but rather, renters can go into 60 days of arrears before getting a further 60 days to rectify this with their landlord, giving both parties extra time to negotiate next steps. Only after the 120 days can landlords move to evict tenants under the normal process of going through NT Civil and Administrative Tribunal.
Residential tenants must prove, through a letter from their employer or bank statements, that coronavirus restrictions have caused their income to be reduced to the point their rent eats up more than 30% of their pay.
The maximum penalty for misrepresenting information is a $31,400 fine (200 penalty units) or two years in prison.
The government has introduced legislation for a six-month moratorium on evictions, prohibition on rent increases during the emergency period, and providing that fixed term tenancies due to expire will continue as a periodic agreement.
Tenants can still have their leases terminated and be evicted if they are causing damage to the property, posing a threat to the landlord or neighbours, not paying rent, refusing to make a rent payment agreement or if they abandon the property.
The laws are effective from 30 March 2020 and will stop operating when all relevant declarations relating to the outbreak of the COVID-19 within South Australia have ceased OR on 8 October 2020 – whichever occurs first.
- Tenants cannot be blacklisted as a result of circumstances caused by Covid-19.
- There is a short-term moratorium on eviction for non-payment of rent due to severe rental distress as a result of COVID-19
- landlords cannot increase rent
- landlords may use technology such as face-time, live video or time-stamped photos for routine inspections where possible, unless there are exceptional circumstances and sufficient safety measures in place for an inspection in person
The South Australian government has cut land tax by $189m from July, and extended a $13m relief package to allow deferment of 2019-20 land tax bills by six months.
Where alternative arrangements are needed as a result of COVID-19, tenants and landlords are encouraged to work together on an agreement and – where an agreement cannot be reached – the matter may need to go before the South Australian Civil and Administrative Tribunal.