In the latest Coronavirus development from QLD there’s some clarification about how protections for tenants will work. Housing and Public Works Minister Mick de Brenni has advised renters will need to prove their loss of income before applying for protection from eviction.

Read more in this article from By Rachel Riga, George Roberts and staff of the ABC…

The Queensland Government has backed down on its coronavirus rental relief package after the real estate industry waged a public campaign alleging the measures favoured renters over landlords.

Housing and Public Works Minister Mick de Brenni said renters suffering financial difficulty due to coronavirus would have to provide evidence of lost income if they wanted to be covered by a freeze on evictions.

“They are that you’ve lost more than 25 per cent of your income, or that you’ve lost so much of your income that you’re paying more than 30 per cent of your income on rent and you can’t afford the other necessities of life,” he said.

“I can’t put a dollar figure on that … that’s why there is real complexity to develop a framework.”

The Real Estate Industry of Queensland (REIQ) had previously called for a rental deferment system so landlords could recover lost income.

Mr de Brenni said it would be up to renters and owner to sit down and work it out.

“That will be a matter for tenants and landlords to work out in the best interest of the long-term security of tenure for those tenants and the financial security of the property owner,” he said.

“We will have a system in place to support the owner and it will include full disclosure of the financial circumstances of a tenant through a conciliation process.”

The Government’s rental assistance package includes a six-month freeze on rental evictions, the ability to extend a lease for six months and a rental assistance grant of up to $500 per week for up to four weeks.

Mr de Brenni said the new guidelines would support landlords and tenants.

“We want to ensure the mum and dad investors out there, that this package takes into full account the concerns that they’ve raised over recent days,” he said.

“We know that for many of those mum and dad investors, they’re not rich, they’re not wealthy, they simply invested in a property for their family’s future.”

Mr de Brenni said renters would have to meet a high threshold if they wanted to break their lease.

“There are limited circumstances in which we will allow a tenant to break their lease with a week’s notice,” Mr de Brenni said.

Inspections would be able to take place if a landlord wanted to sell their property and there was no health risk.

However, if a tenant was self-isolating or in quarantine, a virtual inspection would be able to take place.

Property agents and owners would still be able to access the property for emergency and essential repairs, for example smoke alarm repairs.

The State Government announced a $20 million grant fund would be made available to support 7,000 households to assist with rental payments.

A special COVID-19 housing security committee would also be formed involving the REIQ, Tenants Queensland, the Queensland Council of Social Services, Q-Shelter and the Residential Tenancy Authority, to independently monitor landlords and tenants who needed to negotiated.

‘Share the pain’

The REIQ said the changes to eviction freeze arrangements and rent deferrals “share the pain”.

REIQ chief executive officer Antonia Mercorella said she was very happy with what she called a more balanced approach.

But she said she did not expect all landlords to be happy with the measures.

“I’m sure there will still be some owners who will take the view that it’s not their job to bear the loss and I’m sure on the other side there will be some tenants that will also be disappointed,” she said.

“But I think we’ve known from the very outset that this pandemic is causing pain and grief for all of us.”

‘There’s a power imbalance already’

Tenants Queensland (TQ) chief executive officer Penny Carr said Mr de Brenni’s latest announcement was disappointing.

Ms Carr said she was concerned about the people who could not negotiate rent reductions without having to defer a payment for later on.

“There’s a power imbalance already — you’ve got a process where you’re encouraging negotiations between the parties, which is the best way for it to happen, but at the moment there’s no way to determine those disputes via a third party,” she said.

“The person with less power — in this case it’s the tenant — is going to be at a disadvantage.

Ms Carr said landlords should also have to put something forward to show why they could not afford rent reductions.

“This is not anyone’s fault — we have got to try and find a solution that works for everybody,” Ms Carr said.

“We are not saying that rent should be reduced forever.

Ms Carr has called on Prime Minister Scott Morrison to drive the banks and lenders to contribute more.

Below is a collection of websites for each state that landlords will find useful in these Corona19 virus times. It’s important that you get your information from more credible sources than the media – much of what you read and hear in mainstream media is an interpretation by whoever is writing or speaking. And journalists sometimes get things wrong – yes, really. Your property manager should of course be all over this stuff, but they are pretty busy right now.

NSW:

https://www.fairtrading.nsw.gov.au/resource-library/publications/coronavirus-covid-19

Queensland:

https://www.rta.qld.gov.au/Forms-and-publications/Educational-resources/RTA-responds.html

South Australia

https://www.cbs.sa.gov.au/rental-advice-due-covid-19

Victoria

https://www.consumer.vic.gov.au/resources-and-tools/advice-in-a-disaster/coronavirus-covid19-and-your-rights

Western Australia:

https://www.commerce.wa.gov.au/consumer-protection/covid-19-coronavirus-consumer-protection-faq

Tasmania:

https://www.cbos.tas.gov.au/topics/housing/residential-tenancies-covid-19-emergency-provisions

The ACT:

https://www.covid19.act.gov.au/

The NT:

The NT Government website doesn’t have much, but this is something from the Darwin Community Legal Service which might be useful:

https://www.dcls.org.au/about-us/coronavirus-information/

Finally, we have some clarity for landlords negotiating this new Corona virus world. This is an explanation of the mandatory Commercial Tenancies Code. Landlords and tenants will be sharing the pain. For a landlord, claiming every tax deduction will be critical – and that includes depreciation.

Read more in the following article by Sian Sinclair of Grant Thornton.

After continued jostling with industry groups over the weekend, Prime Minister Scott Morrison today revealed the final details of the mandatory Commercial Tenancies Code for commercial and retail leases. This is generally in line with the update the Prime Minister gave last Friday.

The intention of the Code is to preserve the commercial leases in place and leave both the tenant and the landlord in a position to pick things up again once the period of hibernation is over.

Now agreed upon, the Code will be legislated and managed by the States and Territories and will be subject to binding mediation. The two core principles underpinning the Code will be good faith and proportionality, with landlords and tenants urged to work together on how to best manage rent relief going forward.

• Who does the mandatory code apply to?
  The code will apply to tenants with a turnover of $50m or less.
• Tenants that have experienced a 30% or greater loss in revenue.
• Tenancies where the tenant is participating or will participate in the JobKeeper program.
• What does rent relief look like?
  Landlords are expected to negotiate in good faith and ‘share the pain’.
• The rent relief should be proportionate to the reduction in turnover and should comprise waivers and deferrals.
• Waivers must account for at least 50% of the reduction.
• Any recoupment of deferred rent will be over the duration of the lease period or a minimum of 24 months. This means if a tenant has six months left on their lease, they should be offered a 24 month period to pay any deferred rent.
• Landlords cannot terminate a lease on the basis of non-payment, nor dip into bonds to cover unpaid rent. Those who choose not to engage may forfeit themselves out of the lease.
• Tenants are expected to honour their obligations under a lease (i.e. they can’t just walk away, which was one of the industry concerns when the initial guidelines were announced).

While the eligibility for JobKeeper is currently uncertain, those with rental arrangements that fall outside of the Code (generally turnover above $50m or less than 30% reduction in turnover) will need to negotiate with their landlords without the protection of the Commercial Tenancies Code. Interestingly, many landlords could find themselves offering significantly different lease concessions on a lease by lease basis, depending on which of their tenants are eligible for JobKeeper. A one size fits all approach does not apply, hence the message to negotiate in good faith.

We anticipate there will be additional information to come from the States and Territories about how this will be applied in each jurisdiction, as well as announcements of additional relief on land tax and rates – on the proviso this is passed on to the tenants.

The Prime Minister stressed that the banks will be key to making this work, and urged international banks operating in Australia to provide the same level of support as the national banks have to date. How the support of the banks can be formalised remains to be seen, particularly where international funding is involved. Mortgage payment deferrals are a cash flow inconvenience for banks and currently, these are only for facilities below $10m, so we would like to see some real support in the form of interest waivers or suspensions during any “rent-free periods” required under the Code. There isn’t a sharing of the pain unless the banks are forgoing some income – as with all other parties involved.

The Prime Minister confirmed that residential rent relief will be considered and implemented by each State and Territory and not by the National Cabinet.

 

The federal government have acted quickly with measure to prop up the economy as it battles the Corona virus. The directions to landlords and tenants hasn’t been very clear, though. Hopefully in the coming days there will be some clarity. One thing is for certain, though. Investors will want to claim every deduction they can – and that includes depreciation.

Read more in the following article reproduced from Greg Tacadena of Your Investment Property Magazine…

Tenants who have the financial capacity must continue to pay rent even with the moratorium on rental evictions in place, according to Housing Minister Michael Sukkar.

In a TV interview with ABC News, Sukkar said that the moratorium on evictions amid the COVID-19 outbreak does not necessarily mean that tenants can skip paying their rents.

“Unless you have an arrangement with your landlord that takes into account your financial circumstances, you are required to pay your rent. The moratorium applies to make sure that people do not find themselves without a home,” he said.

Sukkar assured that the national cabinet is exploring options and proposals to set a framework that can help landlords and tenants make an agreement about rental payments.

“To the greatest extent as possible, we want flexibility. We want landlords and tenants working it out for themselves,” he said.

Adrian Kelly, president of the Real Estate Institute of Australia, said Sukkar’s message should clarify the issue about rents and the moratorium on evictions.

“A moratorium on evictions doesn’t mean rent is not payable, it is. If circumstances mean that payment in full is not possible it is a holding off from payments, not a cancellation,” Kelly said.

However, Kelly urged the state governments to step up and provide assistance to Australians to help them continue to pay their bills, including rent.

“The rent cash flow ensures that everyone wins and I unashamedly include the real estate agent in that. We need income in order to continue to employ our property managers who are at the coal face of looking after both tenants and landlords,” he said.

Furthermore, Kelly said it is counterintuitive just to leave tenants and landlords to sort things out themselves.

Sukkar said in the ABC News interview that the national cabinet is already considering some proposals to set a standard.

“I’m sure there will be a framework of minimum standards and requirements. It’s not in any landlord’s interest to lose a great tenant who is going through a short-term difficulty. I’m sure landlords understand that. But we need to put in some minimum standards,” Sukkar said.

In an earlier statement, Ben Kingsley, chairperson of PICA, landlords must also be provided with assistance from the government. PICA outlined some of their suggested policies that would help landlords amid the outbreak.

“Let’s be clear — landlords understand the situation. The vast majority are hardworking, average Australians who own just one rental property,” Kingsley said.