FAQs for Residential Landlords during the coronavirus health crisis

(Current as at 25/05/2020)

The purpose of this document is to provide residential landlords in Victoria with answers to their questions and with updates on the developing response to coronavirus as it impacts housing security.

Both tenants and landlords must comply with the Residential Tenancies Act 1997.

If you have any questions that aren’t answered below, please email them to Carolyn Purnell-Webb, Partner - Property Management & Leasing, on CPurnellWebb@kayburton.com.au. 

Please note, however, that you should seek independent legal and financial advice. 

Legislation was passed on 24th April pertaining to termination of tenancies and rent increases/reductions, which has raised a few questions on the implementation. Consumer Affairs Victoria will be integral in resolving disputes between landlords and tenants in relation to rent reductions where an agreement cannot be reached. Should an agreement still not be reached, an official from the Dispute Resolution Centre will make an enforceable order. 

What happens if my tenant cannot pay rent, as agreed, at this time?

Firstly, the tenant is asked to provide Kay & Burton with some supporting documentation with their request for rent relief. We do explain in advance that many landlords have been impacted by this pandemic and that there is no guarantee that relief can be granted, but that we will communicate their request. We will then discuss the matter with the landlord to try to work out a mutually acceptable proposal. 

You cannot evict the tenant for non-payment of rent unless you can establish that the non-payment is wilful (ie that they’re no paying rent when they haven’t experienced financial hardship), in which case we will seek a Victorian Civil and Administrative Tribunal (VCAT) decision to have the tenant evicted.If the tenant is not paying rent due to the impacts of coronavirus, Kay & Burton will try to come to an agreement with them about the rent they can afford to pay. There is no pre-determined rate or amount that is required for the tenant to pay; a reduced rent amount needs to be reasonable in the circumstances. 

In most cases, we have been able to work out an agreement to keep tenants in place, which is usually welcomed by landlords who prefer to have rental income rather than a vacant property in what can only be described as uncertain times.

If an agreement is not reached between the parties, Consumer Affairs Victoria will attempt to mediate the dispute. Should Consumer Affairs be unable to facilitate an agreement, the matter will be referred to either VCAT for a decision or, where appropriate, the ADR (Alternate Dispute Resolution), whereby an official from the Dispute Resolution Centre can further attempt to mediate or make an enforceable order, which may involve imposing a reduced rent amount.

 

What types of rent relief are being requested?

We are finding that there are three types of rent relief being requested: (1) rent reductions, (2) rent deferments and (3) rent waivers. Good communication between you and Kay & Burton and your tenant and Kay & Burton is critical.

Reductions are a set amount that the rent will be reduced for a set period. Rent payments at the reduced amount reflect that full rent has been paid during this period and your statement will reflect this. This is not recoverable at a later date; it is a complete waiver of the amount agreed.

Deferments are agreements not to pursue the tenant for rent arrears, however the rent does accrue, and your statement will show it as a short payment of rent for the period. This negotiated amount is not recoverable under any landlord insurance policy as the correct procedures of issuing a notice to vacate must be adhered to in order to claim the rent under a default. It is possible to issue the notice to vacate and follow the statutory requirements, however, this entitles the tenant to vacate and effectively ends the tenancy whether it is a fixed-term agreement or not, so this option will not suit all landlords. There is also a risk that accrued debts may overwhelm tenants who, although the intention is to pay, end up unable to should their financial circumstances not improve. Naturally, we will keep a close eye on any payment arrangements and monitor payments.

Waiver is effectively a rent-free period. Your statement will show that the tenant is paid up to the end of the period for which rent is waived.

Will my tenant be liable to pay rent in arrears at the conclusion of the moratorium?

Yes, your tenant will be legally required to pay the rent, as agreed, in arrears at the conclusion of the moratorium. Payment could be made in one lump sum or your tenant could be placed on a mutually acceptable payment plan. If, after 14 days, your tenant does not pay rent, the standard procedures will apply. For more information, please see https://www.consumer.vic.gov.au/housing/renting/during-a-lease-or-residency/rent-and-other-payments/rent-arrears.

If I agree to defer a portion of my tenant’s rent, how soon will they make up the difference once this is all over? Can you enforce it? 

This will depend on the terms of the negotiation. There is the risk that the accrued debts may overwhelm tenants who, although the intention is to pay, end up unable to should their financial circumstances not improve. 

Can I increase my tenant's rent at this time?

No, the Government has placed a six-month ban on residential rent increases, from 29 March, 2020, until late September/early October, 2020. 

Am I eligible for land tax relief?

Information pertaining to land tax relief is dynamic so we recommend that you refer to the State Revenue Office website for more information, which is www.sro.vic.gov.au/coronavirus  

As we understand it, if you have negotiated a rent reduction with your tenant, and the agreement is registered with Consumer Affairs, you will be entitled to a 25% land tax discount, and a deferment of any outstanding land tax, until March, 2021. 

To be eligible, landlords must demonstrate that: 

  • All or part of the property is rented
  • At least one of the tenant's ability to pay their normal rent or the ability to secure a tenant is affected by COVID-19
  • They have provided rent relief to the affected tenants
  • The rent reduction must be at least 25% of the 2020 proportional land tax for the property
  • Applications are made through My Land Tax portal after 1 May 2020, to which you register on the SRO website 

Will my landlord’s rental protection insurance apply at this time?

After having had discussions with landlord protection insurers, it is unclear how, or if, they will apply the exemptions for pandemic events in their policies. Currently, some insurers are covering a six-week period where tenants default, provided that the Residential Tenancies Act is followed, that the policy pre-existed the arrears event, and, in some cases, that your property is managed by an agent who is an authorised partner of the insurer. As you would expect, if a landlord waives their right to rent by providing voluntary relief, this loss cannot be recovered under a regular Landlord Insurance Policy. It is best to discuss your options your property manager should you be approached for rent relief.

Can open-for-inspections continue at this time?

No, the National Cabinet has prohibited auctions and open-for-inspections from midnight 30 March 2020 to midnight 13 April 2020. Instead of open homes, we are providing video footage of the rental property to prospective tenants and pre-qualifying them before showing them through on a private inspection basis, safely and singly.

What are my rights if my tenant wants to leave?

At this time, tenants can break their lease early, or, in some circumstances, have their fixed-term period reduced. The process for claiming the bond remains the same. 

I want to issue a notice to vacate because a family member needs to move in. Can I still do this during a moratorium? 

According to the Emergency Measures Bill, a notice to vacate can be issued if the premises is to be immediately occupied by the landlord, landlord's partner, son, daughter, parent or partner's parent or a person who normally lives with the landlord and dependent. 

What happens if I lease my property and the tenant requests a rent discount as soon as s/he moves in? 

The situation is the same for new tenants as it is for longer-term tenants during this time. Firstly, the tenant is asked to provide Kay & Burton with some supporting documentation with their request for rent relief. We do explain in advance that many landlords have been impacted by this pandemic and that there is no guarantee that relief can be granted, but that we will communicate their request. We will then discuss the matter with the landlord to try to work out a mutually acceptable proposal. 

You cannot evict the tenant for non-payment of rent unless you can establish that the non-payment is wilful (ie that they’re no paying rent when they haven’t experienced financial hardship), in which case we will seek a Victorian Civil and Administrative Tribunal (VCAT) decision to have the tenant evicted.

If the tenant is not paying rent due to the impacts of coronavirus, Kay & Burton will try to come to an agreement with them about the rent they can afford to pay. There is no pre-determined rate or amount that is required for the tenant to pay; a reduced rent amount needs to be reasonable in the circumstances. 

How is Kay & Burton going during this time? How many properties are you leasing and selling each week now? Have you seen a downturn? 

The impact on the housing market from coronavirus remains uncertain. The market was up significantly prior to its onset, with the annual change in Melbourne property values up 12% March YOY. While we certainly experienced a drop mid-March, and there are fewer properties transacting at the moment, there’s still a great deal of appraisal and listing activity and interest.   

What new measures have been introduced as part of the COVID-19 (Emergency Measures) Bill 2020 in relation to the Residential Tenancies Act reform?

Under the current legislation, a party to a residential tenancy agreement will be in breach if they don't perform their oblilgations in a prescribed or contracted way. The Emergency Measures bill removes, in certain circumstances, the status of 'in breach' (s542) which precludes certain actions, such as termination or possession orders, if the act or omission is due to a COVID-19 Reason (s537), taking into account reasonable and proportionate considerations (s538). 

COVID-19 Reasons (s537) include: 

  • A person is ill (not necessarily COVID-19 related)
  • A person's compliance is affected by the exercise of emergency or public health powers
  • A person cannot comply, or is not reasonably practicable for the person to comply, without suffering severe hardship
  • The person cannot comply, or it is not reasonably practicable for the person to comply, because of exceptional circumstances in relation to the COVID-19 pandemic

Reasonable & Proportionate (s538) considerations include: 

  • The nature, frequency and duration of the conduct of the tenant which led to the notice being given, including whether the conduct is a recurring breach of obligations under a tenancy agreement
  • Whether the breach is trivial
  • If the conduct that led to the breach was caused by any other person
  • If Family Violence Order applications have been made or are in force
  • Whether the breach has been remedied
  • If the tenant has, or will soon have, capacity to remedy the breach
  • The effect of the conduct of the tenant on others, such as co-tenants
  • If there is any other course of action reasonably available
  • The behaviour of the landlord or landlord's agent
  • Any other matter VCAT feels is relevant 

What other information are you providing for tenants?

Where a tenant requests rent relief, we are providing additional information and links to websites where other relief may be available. We will continue to update this information for all tenants and we are speaking with landlords and tenants to explore the best options available to minimise impacts on our clients.

Where do I go for financial help?

The banks are offering coronavirus-relief packages as outlined below.  

Adelaide Bank - COVID-19 assistance

AMP - COVID-19 assistance 

ANZ Bank - COVID-19 assistance

Bank of Melbourne - COVID-19 assistance

Bank of Queensland - COVID-19 assistance

BankWest - COVID-19 assistance

Bendigo Bank - COVID-19 assistance

CBA - COVID-19 assistance

Citi Bank - COVID-19 assistance

ING Direct - COVID-19 assistance

Judo - COVID-19 assistance

LaTrobe Financial - COVID-19 assistance

Macquarie - COVID-19 assistance

NAB - COVID-19 assistance

Pepper Money - COVID-19 assistance

RAMS - COVID -19 assistance

Resimac - COVID-19 assistance

Westpac - COVID-19 assistance

Again, If you have any questions that aren’t answered above, please email them to Carolyn Purnell-Webb, Partner - Property Management & Leasing, on CPurnellWebb@kayburton.com.au.


Important Messages

Be the first in the know

Receive the latest Kay & Burton property news delivered straight to your inbox.

Subscribe now No thanks!