Six month moratorium on residential tenancy evictions during COVID-19

The NSW Government is introducing an interim 60-day stop on landlords seeking to evict tenants due to rental arrears as a result of COVID-19, together with longer six month restrictions on rental arrears evictions for those financially disadvantaged by COVID-19.

Read the media release
Read the new Regulation

New measures
Coronavirus (COVID-19) has already had a significant impact on the economy, meaning some tenants are having difficulty keeping up with rent payments. The NSW government is introducing measures to help landlords and tenants work together. The new measures include an interim 60 day stop on landlords issuing termination notices or applying for NSW Civil and Administrative Tribunal (the Tribunal) eviction orders due to rental arrears, where tenants are financially disadvantaged by COVID-19.

“This will allow time for Government financial support to reach those who need it and limit social movement in order to minimise public health risks during the COVID-19 pandemic.”

A landlord is required to negotiate a rent reduction with the tenant in good faith in the first instance, and can only seek to give a termination notice or apply for an eviction after the interim 60-day stop if it is fair and reasonable in the circumstances of the specific case.

Fair Trading will be able to assist landlords and tenants try to reach an agreement if needed.

Along with these restrictions on evictions for rental arrears, the Government will be extending the notice periods for certain other lease termination reasons to 90 days. At any time during the 60 day stop and the longer six month restrictions, landlords can still apply to the Tribunal at any time to take possession of a property if they are suffering undue hardship.

Eligibility
To meet the requirements for 60 day stop on evictions and the longer six month restrictions, a household needs to demonstrate they are impacted by COVID-19. A household is COVID-19 impacted if:

1. one or more rent-paying members of a household have lost employment or income (or had a reduction in employment or income) due to COVID-19 business closures or stand-downs, or

2. one or more rent-paying members of a household have had to stop working or reduce work hours due to illness with COVID-19 or due to COVID-19 carer responsibilities for household or family members, and

3. the above factors result in a household income (inclusive of any government assistance) that is reduced by 25% or more.

Important
All tenants who are not impacted by COVID-19 are expected to honour their existing tenancy agreements including paying all rent and charges in full.

Flowcharts
To understand how the ban on evictions due to COVID-19 may affect your tenancy, see the first flowchart. If you are a landlord and you want to understand how the new measures affect all types of residential tenancy terminations, use the second flowchart.
Flowchart: Can a tenancy be terminated during COVID-19
Flowchart for landlords – termination of tenancy options

Template letters


For tenants

We have created a template letter for tenants to help them when approaching landlords to request rent reduction. We have also created an example.
To help with your request, your letter should also include:

1. your original household income
2. your change in circumstances due to COVID-19 and how this has impacted on your household income
3. the rent payment you would be able to meet under your new household income
4. any income support you receive

Tenant template letter
Tenant example letter

For landlords when responding to a tenant
All landlords must be prepared to negotiate rent payments with tenants experiencing financial hardship due to the COVID-19.

To help you, we have created a template you can use when responding to rent reduction requests. We have also created an example.
Your response letter should also include:

1. your financial situation – be open and honest about your financial situation, including whether you rely on the rental income to cover mortgage repayments or other expenses.

2. your conversations with your lender – outline the result of conversations you’ve had with your lender about waiving or reducing your own mortgage repayments.

3. the rent payment that you would be able to accept

4. clarify whether the rent payment loss (arrears) will be waived or repaid

Landlord template letter to tenant
Landlord example letter to tenant

For landlords when talking to their financial institution
Landlords are encouraged to approach their financial institutions to seek a mortgage freeze or reduced repayments as part of the negotiation discussions with their tenant/s. We have created a template you can use when approaching your lender. We have also created an example.

Your letter should include:

1. your financial situation be open and honest about your financial status if you rely on the income from your rental property to help pay for the mortgage, and are negotiating with your tenant about rent payment, this should be outlined and evidenced in your request.

2. the mortgage waiver or reduced payment you are seeking until you or your tenant resumes normal employment arrangements.

3. clarify whether your rental payment losses (arrears) will be waived or repaid under a repayment plan with your tenant once the COVID-19 emergency is over

Template letter from landlord to financial institution
Example letter from landlord to financial institution

Frequently asked questions

Can a tenant and landlord still end a tenancy if they agree?
Yes. A tenant and landlord can agree to end a tenancy and decide when and how this is to happen.

What proof does a tenant need to show they are impacted by COVID-19?
The tenant can provide simple documents to show that they are impacted by COVID-19, for example:
proof of job termination/stand-down, or loss of work hours
proof of Government income support
proof of prior income.

What do the changes mean for tenants who are impacted by COVID-19?
The new rules put an immediate 60 day stop on termination notices and Tribunal applications for terminations based on rental arrears where a tenant is unable to meet their rental obligations due to being impacted by COVID-19.

This will allow time for tenants to receive Government income support and for landlords to negotiate a reduction or waiver of mortgage repayments with their lender.

It will also allow time for tenants and landlords to negotiate possible reductions in rent if needed. A dispute resolution process is available through NSW Fair Trading if no agreement can be reached or where the landlord or tenant would prefer to use this option.

Does the tenant need to pay back the rental arrears or will the amount be waived?
The amount of rent arrears accrued by a tenant who has negotiated reduced rent will not automatically be waived. Whether rental arrears will be waived is subject to negotiation between the tenant and the landlord (with assistance from Fair Trading’s dispute resolution process as required).

Are sub-tenants covered by the stop on evictions?
The stop on evictions applies to sub-tenants who are unable to meet their rental obligations and who are covered by the Residential Tenancies Act 2010. These are tenants where the property is subject to a written residential tenancy agreement and:

are a sub-tenant under a written residential tenancy agreement with the tenant named in the main tenancy agreement, or

a tenant under the main written tenancy agreement has transferred the tenancy to them.

Can I still end my tenancy using the required notice periods and not negotiate with my landlord?
Yes. Tenants who do not wish to stay in their premises can terminate using the existing notice period required for their specific agreement.
Tenants seeking to end a fixed term agreement early may be required to pay break fees under their agreement. Details about ending a fixed term agreement early are outlined on the Fair Trading website.

Why are we not protected from eviction for six months as was announced following the National Cabinet meeting recently?
The package announced is designed to support tenancies to continue wherever possible. The new laws will provide a six month moratorium on landlords giving termination notices, or making applications for forced evictions, due to rental arrears for tenants who are impacted by COVID-19, provided both parties seek to find a mutually workable solution.

The new laws allow landlords, after the 60-day stop, to seek to terminate a COVID-19 impacted tenancies for rental arrears but this can only occur if they have tried to negotiate a rent reduction with the tenant in good faith and seeking a termination is fair and reasonable in the circumstances of the specific case.

What if the landlord refuses to negotiate and we can’t reach an agreement?
The landlord and tenant should both attempt in good faith to negotiate a reduction in rent.

NSW Fair Trading provides a dispute resolution process that landlords and tenants can use if they can’t reach an agreement themselves. Fair Trading will request evidence from the tenant about their previous income and current income from all sources, including any Government income support. Information will also be sought about any application the tenant has made for income support.

Tenants need to have an idea of how much rent they can pay when considering negotiations. Fair Trading will then contact the landlord to seek a mutual agreement on a temporary arrangement for the payment of rent.

Is income calculated before or after tax?
When determining whether a tenant meets the COVID-19 impact test, the income received is the money coming into the tenant’s bank account after tax.

How does the test apply to group houses where not all rent paying
tenants have been affected by COVID-19?
The COVID-19 impact test applies to the total household income, inclusive of any government assistance, such as the new job keeper payments.

Will my landlord insurance cover my rental losses?
Landlords should check their insurance policy to see whether they are covered for rental default. Different policies will have different limits and requirements. Many insurers are adopting new procedures to deal with the impacts of COVID-19, and may require evidence that the landlord has attempted to negotiate with the tenant.

I am a landlord, but I can’t afford to provide a reduction in rent
Landlords should seek to negotiate with their lender to try to obtain an agreement to waive or reduce mortgage repayments. Many lenders are offering to reduce or waive payments at this time.

If this is possible, landlords should have a greater capacity to agree to a reduced rent or charges for a period of time. The immediate 60-day stop on evictions will also allow time for the tenants to access Government income support and may allow tenants to resume paying existing rent.

Can tenants be encouraged to look at accessing their super to pay rental arrears?
Agents and landlords must not encourage tenants to access their super early to cover any rental arrears. This could constitute unlicensed financial advice and may not be in the best interests of the tenant. Financial advice must only be provided by qualified and licensed financial advisers or counsellors, not by agents or landlords.

What happens once the interim 60 day stop ends?
Once the intermin 60 day stop has ended, a tenant(s) who is still unable to meet their rental obligations due to COVID-19 can only have their tenancy terminated on the basis of rental arrears if the landlord has attempted to negotiate reduced rent in good faith but the tenant has failed to do so.

I am a tenant in social housing – does the stop on evictions apply to me? I am a tenant in social housing – does the stop on evictions apply to me?
Social housing providers have their own processes for dealing with rental arrears and are not covered by the new provisions.

Example scenarios

Reduced income together with income support resulting in less than 25% loss of income

A tenant pays $300 per week in rent under their tenancy agreement

The tenant earned $800 per week but lost their income as a sole trader due to the impacts of COVID-19 business closures on their business, following public health orders

The tenant now receives income support of around $1,500 per fortnight, or $750 per week, paid through their employer*

The tenant’s lost income per week is $50 per week, which is less than 25% of the tenant’s original income.

The stop on termination notices and applications for eviction orders due to rental arrears does not apply to this tenant.

Increase in income due to government support payments

A tenant pays $300 per week in rent under their tenancy agreement

The tenant earned $650 per week but lost their job due to business closures following public health orders

The tenant now receives income support of around $1,400 per fortnight, or $700 per week, paid through their employer

The tenant’s income has now increased as a result of the Commonwealth payment: instead of $1,300 per fortnight, they now earn $1,400 per fortnight*

The stop on termination notices and applications for eviction due to rental arrears does not apply to this tenant, because there has been no reduction in their total income.

Tenant and co-tenant in a family household. The tenant loses income and gets income support

A family pays $750 per week in rent in total and the adults are co-tenants under their tenancy agreement

Tenant A earns $1,000 per week, while their partner tenant B earns $500 per week

Tenant A loses their job due to business closures, but is receiving a government payment of around $1,100 per fortnight or $550 per week*

There is no impact on tenants B’s income

The lost household income is equal to $450, which is equal to 30% of the original household income

The stop on termination notices and applications for eviction orders due to rental arrears applies to this household.

Tenant is sole breadwinner, tenant loses income and gets income support

A tenant pays $600 per week in rent under their tenancy agreement and is the sole breadwinner for the family

The tenant loses their job due to the business closures following the public health order announcements. The tenant’s income was previously $1,000 per week

The tenant receives income support payments from the government of around $1,500 per fortnight, which equals $750 per week*

The loss in household income is equal to $250 per week which is 25% of the original household income

The stop on termination notices and applications for eviction orders due to rental arrears applies to this household.

Share household where all tenants are on the main lease

Two friends share a house and are named on the lease.

The rent is $1000 per week

Tenant A earns $1200 per week and tenant B earns $800 per week, making a combined household income of $2000 per week

Tenant A loses their job and now receives $1115 per fortnight which is around $557 per week.

The combined income of the household is now $1357 per week

The loss in income is $643 per week, which is 32% of the original household income.

The stop on termination notices and applications for eviction orders due to rental arrears applies to this household

Share household with head tenant and sub-tenant on a written lease with head tenant

Two friends share a house and the rent payable on the main lease is $1000 per week

Tenant A is the head tenant and has a written sub-tenancy agreement with Tenant B

Tenant A earns $1200 per week and tenant B earns $800 per week, making a combined household income of $2000 per week

Tenant A loses their job and now receives $1115 per fortnight which is around $557 per week.

The combined income of the household is now $1357 per week

The loss in income is $643 per week, which is 32% of the original household income

The stop on eviction orders being issued due to rental arrears applies to Tenant A’s agreement with the landlord

As Tenant B’s income has not changed, the stop on notices for termination and eviction does not apply to Tenant B’s sub tenancy agreement with tenant A.

I need more support and information
Trained dispute resolution officers in Fair Trading are available to help landlords, managing agents and tenants to negotiate temporary changes in rental arrangements, if agreement cannot be reached between parties.

When you seek assistance with negotiations, we may need to obtain some initial information before it can schedule a time to discuss the matter with both parties.

How to seek help
If you have attempted to negotiate a rental plan without success you can apply for assistance by completing the Tenancy Complaint Form.

Apply for assistance
Tenants will be asked to provide evidence that they are experiencing financial hardship, such as:

proof of temporary or permanent job loss (eg, employer separation letter, evidence of reduced shifts)

proof that your business has suffered due to COVID-19 (eg, type of business – noting that some are now the subject of a government ban and cannot operate)

proof of previous employment income and current income (eg, bank statement, payslip)

proof of Government income support payments or applications made (eg, statement or advice/acknowledgement from Centrelink)

Tenants will need to assess the amount of rent that they are able to pay and the type of rental arrangement requested, for example:

Reduce my rent by $100 a week for a period of six weeks, or

Reduce my rent by $200 a week until employment resumes

Copies of your evidence can be uploaded from your mobile device and attached to the complaint form.

How long is the process?
We will be treating negotiation requests as a matter of priority and will respond as quickly as possible.

The timing for each negotiation process will be largely influenced by the demand for the service as well as whether parties can provide the requested information in a timely manner.


https://www.fairtrading.nsw.gov.au/resource-library/publications/coronavirus-covid19/property/moratorium

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Nightmare Tenants: Why is Tenant Screening Important?

Everyone has heard nightmarish tales of bad landlords. But what about nightmare tenants?

Today, there are more people renting for longer periods than ever before. As property prices continue to rise, fewer people can afford to buy, which creates a large pool of long-term renters.

With more people renting for longer periods, it’s inevitable that landlords and property managers will encounter more problem tenants.

Thorough and proper tenant screening helps to stamp out problem tenants.

Avoiding Nightmare Tenants

Take Landlord A, for example, husband and wife investors. They liked the sound of Tenant A until they realised the tenant hoped to lease the property for his second wife, who had not yet been granted a Visa into the country.

Landlord B is a long-time investor with multiple properties. He rescinded Tenant B’s application only when he learned the tenant’s plan to advertise the other bedroom as short-term rental accommodation.

And Landlord C, based interstate, rejected Tenant C once their employment history and financial statements showed they couldn’t pay the rent.

Luckily, these landlords averted potentially nightmare tenant problems because they used the expert guidance of a qualified property manager.

While the Rental Application form gives the landlord some indication of whether the applicant is a worthy choice, it doesn’t tell the whole story. Stringent tenant screening and reference checking are the best defences against a nightmare tenant.

In the case of the above examples, the property manager’s thorough tenant screening process tells the rest of the story:

  • Tenant A – an in-person interview with the applicant quickly uncovered his true intentions.
  • Tenant B – previous rental history revealed prior evictions for similar conduct.
  • Tenant C – a quick call with current and previous employer’s and a review of recent bills and statement showed the applicant couldn’t afford the rent.

Professional tenant screening can save landlords untold anguish, both emotional and financial. Appoint an experienced property manager to ensure you avoid nightmare tenants and find the right tenant for your property.


Prepare now for new residential tenancy laws

The NSW Parliament recently passed a number of amendments to the Residential Tenancies Act 2010. With over 30% of the NSW population renting, these changes are designed to make it easier for tenants to make a rental property feel like home.

For landlords, it creates an opportunity to attract and retain high quality, long term tenants – providing greater income certainty on their investments.

The new laws also improve protections for victims of domestic violence.

The implementation date for the Residential Tenancies Amendment (Review) Bill 2018, is expected to begin in the first half of 2020 so it’s important all landlords start planning now.

The Reforms in summary

A. Minimum standards identified

At the beginning of any tenancy, all properties will need to meet 7 minimum standards to be deemed fit for habitation. These standards will also need to be maintained throughout the tenancy (by way of repairs). While not an exhaustive list, these standards are considered the minimum baseline.

The 7 minimum standards are:

  1. The property must be structurally sound
  2. Each room must have adequate natural or artificial lighting (the exceptions are storage rooms or garages)
  3. There must be adequate ventilation throughout the property
  4. It must have an electricity and/or gas supply with adequate electricity and gas outlets for lighting, heating and appliances
  5. The property must have bathroom facilities (including toilet and bathing facilities) which provide user privacy
  6. The property must be connected to water supply infrastructure for the supply of hot and cold water for drinking, washing and cleaning
  7. The plumbing and drainage must be satisfactory

B. New resolution powers & rectification orders

The property management industry is plagued by disputes over repairs and maintenance issues along with claims of property damage caused by tenants. The new legislation is designed to reduce these problems by providing NSW Fair Trading with greater powers – including the ability to issue rectification orders.

C. Rent increases limited for periodic leases

Rent increases for periodic leases (that is, where the tenancy has no specified time limit) will be restricted to once every 12 months under the new laws.

D. Protections for victims of domestic violence

Tenants who need to escape a violent partner will be able to terminate their tenancy immediately and without penalty. In addition:

  • The victim/s will not be held accountable for any property damage that occurred during a domestic violence incident
  • The same is true if they are a co-tenant who is not the perpetrator
  • If a tenant terminates a lease because they are a victim of domestic violence, the landlord or their agent are prohibited from adding their name to the tenancy database

E. Separate meters for granny flats etc.

With the rise of dual occupancies, granny flats and the like, the Residential Tenancy Amendments include a new definition for “separately metered premises”. The purpose of this amendment is to reduce the number of disputes between landlords and tenants over who pays for water, electricity and gas.

F. Other changes

The amendments are quite comprehensive and include a number of other changes including:

  • The introduction of penalties for landlords or agents if they fail to provide the tenant with a property condition report at the beginning of the tenancy
  • Mandatory set fees for breaking a fixed-term lease
  • Penalties for landlords who fail to repair smoke alarms
  • Clarification on taking photos and videos during inspections and publishing them to advertise the property for re-lease or sale
  • Stopping database operators charging tenants to access their own information

Take care of your tenants and they’ll take care of your property

Your investment property is a valuable asset so it’s only natural you want to ensure it’s providing a great return on investment, with tenants that will take care of it.

This new legislation is designed to help you do that by providing tighter guidelines on what’s acceptable from both a landlord’s and tenant’s point of view.

For an informed and conscientious property manager to look after your investment needs, call Brigitte Stills on 1300 091 638 or email propertymanager@stillsproperties.com.au She’s been looking after landlords and their properties for over 30 years.


Is Your Tenant Illegally Subletting Your Investment?

The number of Australian’s renting is officially on the rise. While this is great news for residential property investors, it’s not the only thing heading north.

In recent years, tenants who are illegally subletting to strangers, especially tourists and holiday-makers has increased at an alarming rate, leaving the property owners exposed to a range of risks and costly consequences.

Continue reading…


How to secure the right tenant for your investment?

Would you let a stranger into your house? Accepting tenants without adequately screening applicants is akin to allowing a stranger into your house, and handing over the keys. No doubt, a costly decision in any property owner’s book.

While finding a tenant for your rental property is about marketing your property to the right demographic, securing the right tenant for your investment is about thorough tenant screening and reference checking.

Continue reading…