Finally, there’s light at the end of the tunnel for tenants and landlords: new government measures for residential tenancies impacted by COVID-19.
In a major call for greater government action and clarity on the issue, this week NSW announced a $440 million package to help tenants, landlords and agents struggling to negotiate an outcome acceptable to all parties in the current time of crisis.
If you’re wondering what $440 million buys in rescue measures, the package includes temporary protection from eviction for tenants suffering financial stress, a formal negotiation process through the Tenants’ Union of NSW as well as Fair Trading, and land tax relief for landlords providing rental reductions.
But, if you’re counting on blanket rent cuts to be the new normal, it’s time to re-evaluate.
Under the NSW scheme, tenants must continue to pay rent as per usual, unless they can demonstrate financial hardship as a result of COVID-19 – after which they can request a rent reduction.
The specific measures announced by NSW are outlined by REINSW below:
- Tenants are obligated to pay rent on time
- If tenants are suffering financial hardship as a result of COVID-19, and can demonstrate they have lost at least 25% of their net income after tax (and after benefits, such as the government’s stimulus package), they can approach their property manager/landlord for a rent reduction
- If all parties are unable to reach an agreement, the tenant can approach NSW Fair Trading. If the tenant is still unsatisfied with the outcome, they can approach NCAT (NSW Civil & Administrative Tribunal).
- Landlords who reduce rent will receive a waiver on their land tax up to 25%.
Additionally, NSW has put the following measures in place to allow time for tenants to access government income support without eviction:
- An interim 60-day stop on landlords issuing termination notices or applying for NSW eviction orders due to rent arrears, where tenants are impacted by COVID-19
- A longer six-month eviction ban on tenants in rent arrears due to being impacted by COVID-19.
Under the new measures, tenants should not assume that rent reductions don’t need to be paid back once COVID-19 restrictions have been lifted.
The new measures state that the conditions around rent reductions are subject to negotiation with landlords, who can decide whether or not to defer the reductions (delay them for a later date to be paid back) – or to waive them completely (reduce the rent payments without the need to pay back the difference).
Advice for landlords
If you are a landlord with Prudential Real Estate struggling to negotiate with your tenant, or if you are suffering financial hardship yourself, our immediate advice is to let us know so we can provide assistance wherever possible.
The NSW government currently recommends that landlords who cannot afford to provide rent reductions get in touch with their bank or lender. Many lenders are offering to reduce, defer or waive mortgage repayments – see RateCity’s article for full details on Which banks are freezing mortgages for COVID-19.
In NSW, the Tenants’ Union are currently calling for banks to provide better mortgage assistance to landlords such as mandatory loan deferrals, so that landlords can pass on any savings to tenants. But, this is a lever that’s yet to be pulled by the government or made into formal legislation.
As a landlord, you may also be asking whether or not your landlord insurance will cover your rental losses. As many insurers are adopting new procedures to deal with the impacts of COVID-19, our advice is to first check your landlord insurance policy BEFORE you agree to any new measures with your tenant.
Some insurers now require evidence that you have attempted to negotiate with your tenant, while others are putting a temporary halt on taking new clients or policy requests. The answer will come down to who your insurer is and what you are covered for, so be sure to contact them before making a decision about your property.
We care. We really do.
As agents operating in a time of extreme uncertainty and receiving questions from all sides, we’re extremely empathetic of every person and situation impacted by COVID-19. Prudential Real Estate has adapted with the times and will continue to be responsive to new government procedures and policies as they roll out, so that we can continue to assist our clients, colleagues and community to the best of our ability.
If we can help you, please get in contact with us today. You’re not alone – and we can support you to negotiate the right outcome or direct you to the right government resources, whether you’re a tenant, landlord or member of the community.
For further guidance and information, please see the below resources:
Service NSW: Residential tenancy support package
NSW Government: COVID-19 financial support updates
Fair Trading NSW: Six month moratorium on residential tenancy evictions
Prudential Real Estate: COVID-19 updates and information