14/04/2020 - 14:32

Residential evictions, rent rises to go on hold

14/04/2020 - 14:32

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A six-month moratorium will be placed on the eviction of residential tenants and rent increases will be put on hold for the same period, under new legislation that's been described as a mixed bag by the state's top real estate industry body.

Renters affected by COVID-19 have been offered a lifeline for their tenancy agreements, but must make arrangements to pay all rent owed. Photo: Gabriel Oliveira

A six-month moratorium will be placed on the eviction of residential tenants and rent increases will be put on hold for the same period, under new legislation that's been described as a mixed bag by the state's top real estate industry body.

Premier Mark McGowan today unveiled the Residential Tenancies (COVID-19 Response) Bill, designed to prevent tenants from facing severe financial difficulties if they are affected by COVID-19.

Landlords will be able to defer any non-urgent repairs or property upgrades under the Bill, while exemptions will be made to the moratorium in limited circumstances, such as property damage, posing a threat to neighbours or abandonment of property.

Any fixed-term tenancy agreement due to expire will continue as a periodic arrangement, while tenants will be able to end a tenancy deal prior to its end date without incurring break lease fees.

The laws will apply to tenants in public and private housing, park homes and boarders and lodgers.

Mr McGowan said he did not want to see anyone who had lost their job be forced out onto the street by their landlord, but warned the moratorium on evictions did not mean tenants could stop paying rent.

“If they don’t, that will obviously have a dramatic impact on their credit rating, their chances of getting another tenancy will be limited, there is obviously a whole bunch of things that will happen to people that don’t pay their rent,” Mr McGowan told reporters today.

The premier urged affected landlords and tenants to negotiate a mutually acceptable agreement to preserve tenancies and formulate plans for repayment in the case of any deferred rents.

Suggested solutions in the event a tenant cannot pay rent include rent-free periods, a decrease in rent or a mutual agreement to terminate a lease without penalty.

Tenants should not be asked to provide landlords with any evidence of savings such as a bank statement, but landlords would be allowed to request evidence of financial hardship or of the tenant losing their job.

Mr McGowan said he believed there was sufficient support from Australia’s banking sector to support landlords facing challenges from non-payment of rents.

“Banks have offered a freeze on mortgage repayments, and other assistance is available to those who are experiencing difficulty in making repayments,” he said.

“We are not legislating to require a reduction in rents for residential tenancies. 

“I urge affected landlords and tenants to respectfully talk to each other and come to an acceptable agreement for the six month period.

“Remember, this is a state of emergency and we are all in this together. What we are trying to do here is provide a sensible way forward.”

Real Estate Institute of Western Australia president Damian Collins, however, said while industry welcomed the assistance, he believed disproportionate support had been offered to tenants.

Mr Collins said it was good that tenants would remain responsible for paying rent, but the policy seemed to push the burden onto landlords to bear the costs of any deferred payments.

"The vast majority of rental properties do have mortgages on them, and the typical landlord profile in residential someone earning around $80,000 with one rental property, that’s pretty much the demographic," Mr Collins told Business News

"While the banks have said they won’t foreclose and the banks are going to be sympathetic, the problem is that that is still a debt that the landlord owes.

"Those landlords who are borrowing and negative gearing, their debt is going to accumulate, it’s not going away, and in six months’ time they are potentially having another $5,000 to $10,000 added to their mortgage over the next six months or so. 

"There’s no real relief for them, and it is the same for self-funded retirees.

"Some people are managing properties and it’s their sole source of income.

"Now if the tenant doesn’t pay, they’ve got no income and there is no real support for those people."

Mr Collins said REIWA had advocated for a rental assistance package, similar to the 25 per cent rental support offered by the New South Wales government. 

"A rental assistance package, limited specifically to those tenants who can demonstrate a reduced amount of income over an extended period of time, would have been fair and reasonable," he said.

"We weren’t asking the government to make up all of the rent, but certainly a payment of around $50 to $200/week would have helped."

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