Clarity on tenancies welcome but more detail urgently needed

LEADING property group Ray White has welcomed recent announcements by state governments in South Australia, Queensland and New South Wales which provided further clarity around support for residential tenancies amid the COVID-19 health crisis.

The property giant with 1000 offices in its network is seeking further clarification on evictions in all areas outside NSW as a matter of urgency and priority.

Particular highlights are noted as follows:

1. Queensland announced a rental grant of up to $2000 per person for COVID-19 affected tenants who have exhausted all other financial options.

2. In NSW, residential landlords and tenants will be required to negotiate rental payments in good faith in circumstances where a household has lost at least 25 percent of its income because of health pandemic.

3. Eligible tenants in NSW will be protected from eviction until the National Civil and Administrative Tribunal is satisfied negotiations have concluded, with any unpaid rent to accrue as arrears in that time.

4. Queensland and NSW will both provide up to a 25 percent discount on land tax for the 2020 calendar year as part of packages worth $400 million and $440 million respectively, on the proviso savings are passed to tenants in the form of rental relief.

5. SA was quick with their precise legislation delivery last week which provided clear guidelines for the state’s alternate procedures not only during the pandemic but also post the crisis.

After the Prime Minister’s statement in late March that there would be a federal moratorium on evictions, many tenants assumed this meant they would not need to pay rent for the next six months regardless of whether or not COVID-19 had impacted them.

Property managers around the country were subsequently inundated with calls from both tenants and landlords who were concerned about the potential impact on their personal situations.

Ray White Group Managing Director Dan White said clarification around evictions in every state was critically important.

“I think everyone agrees that unless a landlord or tenant can prove their financial hardship is directly related to the COVID-19 pandemic, the pre-existing rules should still apply. We need a clear and efficient process for both tenant and landlord to prove hardship from COVID-19 and therefore receive the safeguards the government has proposed, and as an industry we think we can play a role in helping all parties achieve this,” he said.

“The NSW government, and it seems the Queensland government, are relying on the tribunals as the primary point by which landlords and tenants can prove financial hardship and mediate outcomes. We believe that the real estate industry can and should play an important role in these negotiations as the intermediary wherever a property is under professional management, rather than private management by the landlord.”

The property group also believes government phone hotlines should be established in each state to support people - particularly those aged over 70 or those who are immunocompromised - and struggling to access vital information and services.

“There some 2.5 million Australians do not have access to the internet at home or own a smartphone and many of those people are tenants in isolation who need advice or services.”

Mr White said one of the biggest grey areas surrounding vulnerable tenancies was that insurers were yet to clarify if landlord insurance covers epidemics such as COVID-19.

“Landlord insurance providers are all currently advising that a termination process should be stringently followed by managing agents to ensure a future rent default claim will be upheld in the landlord's favour," he said.

“We believe that any tenants who do not have the ability to meet the financial commitment of their rent - due to redundancy and or reduced hours or income -should have the right to terminate their lease without penalties,” he said.

“There needs to be a formal requirement for tenants to establish that they have lost their employment or it has been reduced by a percentage due to the pandemic in order to qualify for protection against eviction for non payment of rent.

“All of the state governments should be clear on whether any rent not paid by the tenant during the six month moratorium is to be accrued as a debt to the landlord, as has been clarified in NSW.”

NOTES
Almost one in three Australians live in rental properties. In Australia, renting has increased from 25% of households in 1986 to 31% in 2016, according to the ABS.
60% of tenants who rent privately have a household income of less than $78,000.
Without a managing agent, tenants in the private rental sector who suffer financial hardship as a result of COVID-19 will be forced to negotiate directly with the landlord rather than the intermediary of a professional managing agent subject to statutory regulation.