A hold on evictions for renters

Australian Government COVID-19 Stimulus

Photo by Tierra Mallorca on Unsplash

This has got to be a stressful time for landlords and tenants alike. Many tenants have either seen their incomes reduced through reduced hours or trade and unfortunately, some have lost their livelihoods altogether. The flow-on effect is that landlords are now under pressure not only from the economic fallout of the COVID-19 pandemic but from government intervention that will see a 6-month moratorium on evicting tenants from both commercial and residential properties.

What we know so far


The Prime Minister announced on Monday, 30 March 2020 that the National Cabinet had agreed to a set of common principles to help both commercial and residential tenants.


The principles are:


  • a short term, temporary moratorium on eviction for non-payment of rent to be applied across tenancies impacted by severe rental distress due to coronavirus

  • tenants and landlords are encouraged to agree on rent relief or temporary amendments to the lease

  • the reduction or waiver of rental payment for a defined period for impacted tenants

  • the ability for tenants to terminate leases and/or seek mediation or conciliation on the grounds of financial distress

  • commercial property owners should ensure that any benefits received in respect of their properties should also benefit their tenants in proportion to the economic impact caused by coronavirus

  • landlords and tenants not significantly affected by coronavirus are expected to honour their lease and rental agreements

  • cost-sharing or deferral of losses between landlords and tenants, with Commonwealth, state and territory governments, local government and financial institutions to consider mechanisms to provide assistance

I'm a landlord. What should I do?


Regardless of whether you are a commercial or residential landlord, if your tenant has given you notice that they are under financial distress we recommend that you talk it through with your tenant. A simple phone call should clear up a lot and will hopefully get both parties on the same page.


Obviously you should maintain all of the social distancing guidelines that are in place at the time that you read this.


We recommend that you:


  • Continually check for changes to the legislation relevant to your state. Legislation relevant to tenancies are state-based so you will need to ensure that what you are checking is relevant to your lease agreement. Also, at the time of writing, this is an in-principle agreement from the National Cabinet. You cannot guarantee anything until it passes into law.

  • If you haven't already done so, engage a qualified and licenced property manager. They will know your rights as a landlord, the timeframes that you need to follow for issuing notices etc and how you can navigate the processes of law if you need to. In the current environment, you should expect that a property manager may negotiate a fee for service, rather than a commission given that your tenant may negotiate a rental reduction, rent-free period or may not pay you any rent during the moratorium.

  • If you have landlords insurance, check what you are covered for and your obligations to the insurer in the event that you need to make a claim.

  • You can ask your tenant for evidence that they are in financial distress. For commercial landlords, this could be comparative financial reports on a month to month basis or to the same period from the previous year. For residential landlords, this could be payslips to show reduced working hours or early termination payment. Commercial landlords should ask for the financial statements to be verified by a third-party such as an accountant or auditor who is bound by the code of conduct of a recognised professional body (either CPA Australia, Chartered Accountants ANZ or Institute of Public Accountants). Financial statements run from the business owner's accounting software should not be trusted as most times the figures will be wrong (if they are doing the bookkeeping themselves) and again, the financials will not have not been verified by an independent party who has their licence on the line.

  • Help your tenant to access funding that is being provided in the stimulus from the Federal Government or Queensland Government COVID-19 Jobs Support Loan scheme. You may need to get them to engage with an accountant to find out what stimulus they can access and/or to help them implement the things that will need to be done to access the stimulus/funding.

  • See what the tenant can pay. Maybe negotiate a temporary reduction to their rent. If possible, negotiate to have catch-up payments at the end of the period.

  • Let the tenant know that until you have an arrangement in place, that nothing changes with respect to breaches of the lease. If the tenant, misses a rental payment or breaches any other part of the lease agreement, you should record this through whatever mechanism is in place in your state. For Queensland residential tenancies, this is done through a Notice to Remedy Breach or Form 11.

  • Talk to properly qualified professional advisors such as your financial planner, lawyer or accountant. Don't be the one to misinterpret the various stimulus measures or to not take advantage of the stimulus measures that might be available to you. A good advisor will tell you whether it will be worth your while to engage their services to either keep you out of jail or to get a tangible benefit that will be equal or greater than their fees.

  • Talk to your bank and find out if they will have measures that can help you as one of their borrowers. The Australian Banking Association has given their reassurance that Australian banks will assist borrowers (in particular businesses) affected by COVID-19. This should be taken with a grain of salt as each bank will have its own policies and criteria on how they will support borrowers affected by COVID-19. We also recommend that you remain anonymous in any conversations with your bank until you are sure that you know if and how they will support YOU.

  • Get your financials up-to-date. So many businesses do not have their financial statements prepared thinking that it's one of those ways accountants make more money. Financials statements are so important whenever you are looking to do anything with your bank and you'll see that having them prepared on an annual basis when you don't need them is such a good idea for when you do need them.......urgently!

  • Keep up to date with the information that is available. This moratorium will also have a flow-on effect on landlords' ability to pay for council and water rates. It would not surprise us if councils and government-run utility businesses offer assistance to landlords in line with state and federal governments.

  • In a worst-case scenario, assuming that your tenant pays you nothing during the eviction moratorium, you will need to make a commercial decision on whether to take action to recoup your losses through lawyers or QCAT (or similar in your state).


I'm a tenant. What should I do?


If you're a tenant in financial distress, again, talk to your landlord or property manager. Keep the lines of communication open and don't leave your landlord in the dark.


  • Continually check for changes to the legislation relevant to your state. Legislation relevant to tenancies are state-based so you will need to ensure that what you are checking is relevant to your lease agreement. Also, at the time of writing, this is an in-principle agreement from the National Cabinet. You cannot guarantee anything until it passes into law.

  • Prepare evidence for your landlord to show that you are in fact suffering financial distress caused by the COVID-19 pandemic. For commercial tenants, prepare comparative financial reports on a month to month basis or to the same period from the previous year. For residential tenants, this could be payslips to show reduced working hours or early termination payment. Be prepared for commercial landlords to ask for the financial statements to be verified by a third-party such as an accountant or auditor who is bound by the code of conduct of a recognised professional body (either CPA Australia, Chartered Accountants ANZ or Institute of Public Accountants).

  • Take time to sit down and find out about accessing funding that is being provided in the stimulus from the Federal Government or Queensland Government COVID-19 Jobs Support Loan scheme. You may need to get to engage with an accountant to find out what stimulus you can access and/or to help you implement the things that you will need to do to access the stimulus/funding.

  • Work out what you can pay to your landlord. Maybe negotiate a temporary reduction to your rent. Your landlord is likely to want to help you and some cashflow for them will be better than none.

  • Keep up with the obligations you have under the lease agreement until you have an arrangement in place. Nothing changes with respect to breaches of the lease, even under an eviction moratorium. You can still accrue debts for your rent obligations but your landlord will not be able to evict you until the moratorium ceases. You landlord will still be able to sue you for arrears afterwards if you don't pay your agreed rent on time.

  • Talk to properly qualified professional advisors such as your financial planner, lawyer or accountant. Don't be the one to misinterpret the various stimulus measures or to not take advantage of the stimulus measures that might be available to you. A good advisor will tell you whether it will be worth your while to engage their services to either keep you out of jail or to get a tangible benefit that will be equal or greater than their fees.

  • If you have business finance, talk to your bank and find out if they will have measures that can help you as one of their borrowers. The Australian Banking Association has given their reassurance that Australian banks will assist borrowers (in particular businesses) affected by COVID-19. This should be taken with a grain of salt as each bank will have its own policies and criteria on how they will support borrowers affected by COVID-19. We also recommend that you remain anonymous in any conversations with your bank until you are sure that you know if and how they will support YOU.

  • For business tenants, get your financials up-to-date. So many businesses do not have their financial statements prepared thinking that it's one of those ways accountants make more money. Financials statements are so important whenever you are looking to do anything with your bank and you'll see that having them prepared on an annual basis when you don't need them is such a good idea for when you do need them.......urgently!

  • Consider non-bank lending sources for funding but understand that the interest rates are higher than a bank and they will still want to assess you or your business for viability to repay the debt.


Update - 2 April 2020: Residential tenants can also apply for the Queensland Government COVID-19 Rental Grant. The grant is only available to Queenslanders who need it the most and have exhausted all other options. The COVID-19 Rental Grant is a one-off payment of up to 4 weeks rent (maximum of $2000) available to those affected by the COVID-19 pandemic who do not have access to other financial assistance. The grant is paid directly to your lessor. Eligibility

Applicants must meet the following criteria:


  • you live in Queensland

  • you have, or will shortly have, a bond registered with the Residential Tenancies Authority

  • you are an Australian citizen, permanent resident, or have a temporary or permanent protection visa or possess a bridging visa

  • you do not have more than $10,000 in cash and savings

  • you can provide evidence of attempts to negotiate a payment plan with your lessor

  • you have lost your job and have applied to Centrelink for income support

  • you are waiting for your application with Centrelink to be approved.

Go to the source


For more information about the stimulus go to:


business.gov.au

ausbanking.org.au

https://www.qld.gov.au/housing/renting/rent-assistance/bond-loan/covid19-rental-grant

Need more help


Call us on (07) 3868 3343

Book an appointment https://aheadfornumbers.as.me/

Email us admin@aheadfornumbers.com


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