Adrian Kelly, of REIA, has the answers you need.
Adrian Kelly, of REIA, has the answers you need.

Ask the Expert: Rental market changes after COVID-19

Tenants and landlords alike are facing new challenges in the coronavirus crisis, with the Federal Government stepping in to stop renters being evicted.

But there is still detail needed on the scheme, and many landlords are worried about their own finances.

Expert Adrian Kelly was online today to offer advice, but warned all states, other than Tasmania, were yet to finalise their legislation, and that could differ from state to state.

 

The REIA - Real Estate Institute of Australia - president said it was important "that the states do the job properly as opposed to enacting flawed legislation as that would be much worse", but they needed to act soon.

"We have tenants and property owners phoning us every five minutes telling us about their issues so we really need some clarity right now," he said. "From our point of view we have now become social workers as well. The amount of people calling us in tears is just draining."

Here's more of what he had to say:

 

Q. My partner and I have just bought our first home and unfortunately it has a tenant in it who is playing hardball, albeit the contract requires vacant possession. Settlement is within the next 30 days and we're concerned as this could hurt us in all possible ways. I know the law 'now', which states we'll need to take them to the tribunal. What are my chances of having this person evicted before and at the tribunal? Will this now affect our first home buyer's grant? And is it our responsibility or the current owner's to resolve this prior to settlement?

A. This is a very common problem right now. Many people are in exactly your situation. We need to wait for the legislation to read the detail. In Tasmania, the "notice to vacate" will stand and the tenant must move out of the property. It is the owner's responsibility however you are all in the same boat. Re your FHB grant, I am sure some leniency will be applied given the circumstances.

 

Q. My husband and I are self-funded retirees and have a one-bedroom apartment investment property. We have no mortgage on this and the rent forms part of our monthly income, along with an income stream from our superannuation. We have not been approached as yet from our tenant but are concerned if we are. The rent is $300pw and if the tenant was receiving the $1500 per fortnight Jobseeker allowance I would expect they could still pay the rent. My question is what measures are in place to substantiate any hardship as it appears this situation is wide open to rorting.

A. Yes I feel your pain. Short answer, if your tenant still has the means to pay the rent, they must keep paying the rent. The PM has been very clear about this. State regulators will be watching for any tenants who try to abuse the system in these challenging times. Re substantiating hardship by a tenant, my personal view is a simple letter from the tenant's employer should be provided. It will always be best to come to an arrangement with your tenant and keep some rent flowing than none at all.

 

Q. Can the Government reduce land tax or rates to help landlords while landlords help tenants (by reducing the rent) to get through this crisis?

A. I know that some state governments are working on this but a deferral isn't going to be enough particularly if no rent is being paid. I suspect the states are very nervous about land tax given that if property sales slow, so will stamp duty income.

 

Q. We have been asked to vacate our rental in May. The landlord has changed agents for the sale of their property and new agents are asking us to still vacate. I am still working and able to continue to pay rent but my partner is not and times are hard. I have told the new agents that we have currently stopped looking for a new property during COVID-19 and will continue to do so when things ease down a bit. Is this a stance we can legally take?

A. It depends on what is contained in the legislation that we are all waiting on. A notice to vacate prior to the legislation being enacted will most likely still be enforceable but let's wait and see. This area in particular is one that we really need some clarity on because there are many people just like you in this situation around the country.

 

Q. When will the government make it mandatory that Centrelink payments of rent assistance be paid direct to agents or private landlords as currently this is not required?

A. REIA has suggested this to government on a number of occasions including last week and the week before given the current circumstances.

 

Q. If your tenant is facing hardship, has lost the ability to pay rent and stays in the property for six months do banks require proof to defer landlord repayments? Can the landlord ask for proof that the tenant is in hardship? Is the tenant liable for back payment of unpaid rent or is this, along with landlord bank repayments, simply put on hold during the hibernation? My concern is that there are a lot more expenses that a landlord is accountable for apart from these repayments, rates, insurance, repairs, water etc. Is there any assistance in those areas?

A. Re banks requiring proof of hardship … no. I have deferred my own mortgage and it was a simple process.

Re asking for proof from the tenant, that is reasonable given the circumstances.

Unpaid rent still needs to be paid.

Outgoings for the property is a large "sleeper" issue which REIA is working on. Deferral of expenses isn't going to be enough because a property owner who receives no rent and then has a mountain of bills to pay will be in a precarious position. I suspect a complete waiver of some expenses will need to occur.

 

You can see more questions and answers in the comments below.

Originally published as Ask the Expert: Rental market changes after COVID-19


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