11 May

If you rely on income from renting out residential property you are no doubt concerned about the potential impact of the COVID-19 measures introduced to protect residential tenants. 

After considerable political back and forward (and a concerted campaign by the REIQ) a freeze on evictions due to rent arrears caused by financial distress due to the impacts of COVID-19 was announced on 29th March 2020.  The key point to note here is that it applies only if the circumstances are due to the impacts of COVID-19. While the government was attempting to put in broader protections for tenants, ultimately they kept it relatively focused on those impacted directly. 

Who is entitled? 

Not all residential tenants are entitled to the COVID-19 protection against eviction.  To meet the requirements for the six-month moratorium on evictions, a household is impacted if:

1. A person is suffering excessive hardship due to the COVID-19 emergency if any of the following apply:
   1. one or more tenants or residents are afflicted by COVID-19
   2. they are subject to a public health direction to stay at a place
   3. a public health direction has closed their employment or restricted their employer’s trade or business
   4. they are self-isolating because they or a member of their household or a someone they are a primary carer for is a vulnerable person
   5. they are unable to work because of a travel restriction
   6. they have been prevented from returning to Australia; and
2. the person suffers a loss of income of 25% or more, 
3.  the rent payable is 30% or more of the person’s income.

What do you need to do?

Not everyone’s situation is the same so you need to be clear on what your options as an owner are. The government is advising that the preferred approach is to come to an agreement with your tenant if they find themselves in the above situation. However, if your tenant was already in rent arrears before 29th March 2020 or is in default of non-payment related provisions of their lease, then as a landlord you may be entitled to follow the normal processes for dealing with tenants in breach of their lease obligations, including evictions. 

It’s also important to consider the effect of your Landlord Insurance Policy. Some policies will be impacted by your negotiations if you agree a lesser rent so you need to be clear on what your insurance will and won’t cover at that time. 

Everyone’s situation is different at this difficult time so it is important that you understand your legal rights so you can make the best decisions. At Arenburg we are happy to discuss these and any other commercial issues.