Experts slam rent relief delays after coronavirus-linked economic hibernation

Experts have criticised the delay in comprehensive rent relief announcements from Australia’s national cabinet, as tenants who have lost their jobs due to the coronavirus-linked economic shutdown inundate support services with calls for help.

It’s almost two weeks since pubs were closed and restaurants were restricted to takeaway, while airlines stood down thousands of staff and several discretionary retailers closed stores over that time.

With tens of thousands of workers suddenly without their regular incomes, anxiety over looming rent payments is high.

The national cabinet has announced a moratorium on evictions for residential tenants during the crisis, but Prime Minister Scott Morrison has emphasised that it is not a moratorium on rents, and called for landlords, tenants and banks to negotiate directly.

Speculation has been swirling of a more detailed rent relief package for weeks but hopes have been dashed at three successive press conferences following national cabinet meetings so far.

The eviction ban has yet to be legislated by most states, complicating the position of tenants unable to meet their commitments, while some property managers have preemptively warned tenants they must pay their rent even if their income falls.

The Tenants’ Union of New South Wales is being swamped by calls for help from renters.

“Many people are feeling like they’ve been abandoned,” said senior policy officer Leo Patterson Ross. “They’re coming to us saying, ‘I can’t do anything, I tried to negotiate with my landlord and they’ve told me no, what else can I do until more government announcements?’ And in the meantime they’re falling further into rent debt.

“People are very distressed, they’re terrified of losing their homes … and they’re just getting nothing [from the government] day after day, it’s putting people into a really awful situation.”

There have been positive responses from landlords and property managers, Mr Patterson Ross said, but there were many unable or unwilling to reduce rents.

He noted some property managers had asked renters to exhaust other support options such as superannuation – a recommendation slammed by ASIC as a possible contravention of corporations law, carrying penalties of fines or jail time – before they would pass on requests to landlords.

Mr Patterson Ross welcomed the Job Seeker and Job Keeper payments for workers who have been made redundant or stood down but said they would not be enough to support tenants in more expensive rental markets such as Sydney and Melbourne.

He said more support and certainty, particularly around what would happen to accumulated rental arrears at the end of the moratorium, was urgently needed.

While a moratorium on evictions had been announced, the states and territories – with the exception of Tasmania – had yet to legislate this, he said.

“I think they are trying to come up with the whole package, covering evictions, rents, and that takes some time, but in the meantime there’s just so much uncertainty,” he said.

In Queensland, a $500 a week rental relief payment has been announced and the ban on evictions is effectively in place but neither have been formally enshrined yet.

The rental payment will be an expanded version of a payment offered to family violence victims.

The Tasmanian parliament is working on passing new bills which would legally ban inspections, maintenance and evictions for non-payment of rent during the crisis, except in emergencies.

The laws will also have provisions for either party to end a lease if they are experiencing severe hardship.

The ACT has announced measures to offer financial relief to landlords and homeowners if they reduce rents for tenants doing it tough or are facing hardship themselves.

Households would be able to defer rates for 12 months if they have incomes below $160,000 and have had a 25 per cent reduction in income, and landlords would get tax relief if they agree to lower rents by at least 25 per cent.

The ban on evictions needed to be legislated across all states and territories as soon as possible, said Brendan Coates, program director of household finances at The Grattan Institute.

“Some states have already effectively done so … but you want bans legislated as soon as possible because there are reports of landlords trying to push tenants out as soon as possible.”

Mr Coates said Job Seeker and Job Keeper payments, together with extra rent assistance or family payments, should go a long way to replacing income for those on lower to medium incomes, which most renters are. Meanwhile, high income earners were likely to have more substantial savings.

“Once they have access to more generous support payments, they probably can [pay rent] … it’s just that support will take a little while to arrive.”

However Mr Coates said there were gaps that needed to be filled, likely by the states, to support those ineligible for recently announced measures, such as temporary migrant workers, international students or even workers whose employers did not want to apply for the Job Keeper payments.

He added that in addition to banning evictions, fees for the early termination of leases should be abolished so it is easier for tenants to move if needed – particularly as rents fall and more affordable options become available.

Real Estate Institute of Australia president Adrian Kelly said the body did not condone agents providing financial advice to tenants, and acknowledged that some communications had been less than acceptable, while backing the eviction on moratoriums.

“We have been waiting nearly two weeks now for the state and federal governments to agree on a framework so that we can get on with our job,” he said.

“Our members are receiving telephone calls every five minutes from our tenants and property owners who have lost employment.”

Landlord insurance is another complicating factor. Agents and landlords have rejected rent decreases, sometimes preemptively, by saying it could invalidate the agent’s insurance policy.

This is true, but not in all cases. Most, but not all, policies require proof of eviction or intention to re-let a home to claim for loss of rent, which some landlords might be considering if their tenants can’t pay.

Because this is the case for the majority of policies, most insurers have stopped issuing new products until they receive certainty about evictions and non-payment of rent for tenants in hardship.

Some are still offering new policies, but with an embargo in place on rent default cover.

Existing policies will continue to be honoured, but landlords will need to find out if their insurer has waived the need to evict or show intention to re-let to claim for loss of rent.

IAG insurers NRMA, CGU, WFI, SGIO and SGIC have waived this requirement.