Progress for COVID-Impacted Rental Tenants and Property Owners

Author: Lisa Indge, April 18, 2020

I hope you have all taken a moment to remember today what the ANZAC’s did for our nation and others. We are truly grateful for their sacrifice and efforts.

We are also very grateful for the nations adherence to restrictions and for the affect that has had on new Covid cases. Indications are that we will soon be easing those restrictions which is great news for us all!

As I’m sure you can imagine, we have been working through rent relief requests and resolving where we can. We had 65 tenancies affected at the beginning of the week. We’ve actually received lots more documentation from our tenants this week as information and documentation has flowed through from the JobKeeper and JobSeeker programmes. Businesses are also receiving financial relief through credits on their BAS. I haven’t yet heard of a business owner receiving a grant but I do know some have applied.

Rent Relief

I thought I’d recap on this subject today so that I can give you an update on the rather slippery subject 10 days on from the release of the Regulation. See here if you’d like a refresher –https://www.fairtrading.nsw.gov.au/resource-library/publications/coronavirus-covid-19/property/moratorium

With the increase in tenants being informed of the payments they will receive from Centrelink, we have been able to close off on some rent relief requests as those tenants do not qualify. I even received an email from a tenant yesterday morning, the first one I read, withdrawing their request for rent relief. A great way to start the day!

For those landlords who do pay land tax and the tenant can provide appropriate evidence of a reduction in household income of 25% or more, it is appropriate to apply for the 25% rebate or waiver on land tax. This is effectively what the government is directing us to do. The rebate or waiver must be passed onto the tenant in full. This is actually the only way landlords are being supported in the stimulus package. Example: Landlord pays $4K in land tax per annum and $1K is offered as rebate or waiver to be passed onto a qualifying tenant. Unfortunately the application process is not yet open but we are preparing for this by ensuring we have the supporting documentation. Link here to government information if you’d like to read further – https://www.revenue.nsw.gov.au/news-media-releases/covid-19-tax-relief-measures/covid-19-coronavirus-and-land-tax

The fairest negotiations we have been able to finalise are those where an owner is able to offer a rent abatement which the tenant does not have to pay back together with a deferment of an amount the tenant does have to repay. Example: Rent is $500 per week – landlord offers abatement of $50 per week and tenant defers payment of $50 per week. This would be where there is no land tax rebate available.

We’re finding it difficult to negotiate where a tenant has been earning good money and has been paying a higher than average rent. If they are now receiving JobKeeper of $750 per week they are unable to pay full rent unless they use savings. Those tenants qualify for rent negotiations and are asking for significant reductions in rent which most landlords are not able to provide. Let’s not forget that many owners have been financially affected by Covid too. With these, we are seeking to reach agreement of a combination of abatement and deferment, mostly deferment.

What happens if we can’t reach agreement? Either party can apply to Fair Trading for mediation which is not binding and then if agreement cannot be reached, either party can apply to NCAT (tribunal). In the example above, it would be up to the tenant to apply as they don’t agree or accept what the owners is offering. If the tenancy falls into arrears of more than 14 days, we would likely apply to tribunal and Fair Trading assuming the Fair Trading process would happen first and allow further negotiations to lead to agreement.

We have a case where a tenant has refused to provide documentation in order to demonstrate 25% loss of household income so we have lodged a complaint to Fair Trading. They will require the documentation to be provided in order for them to mediate. If they refuse, the matter will be closed by Fair Trading but we will then have this further refusal to provide as evidence at tribunal. This case is already scheduled for hearing 2nd June as the tenant was already in arrears before the new Regulation commenced.

Parliament Sitting 11th May

The REI (Real Estate Institute) has been working tirelessly to support the interests of landlords and property managers by lobbying government. The NSW Parliament has been called to sit on 11th May and we have been advised by the REI that landlords interests are on the table to be discussed. Principally, the REI’s position is that landlords have been left to cover the cost of rent relief by deferring mortgage payments or simply by using their own savings. We hope they will come to the party with more support for landlords.

If you have any questions or concerns, just let me know. We’re here to help!

Kind Regards
Lisa
hello@letsrent.com.au
02 9555 4886