It’s certainly an unnerving time for Tenants and Landlords alike.
It’s hard to grasp the fact that we are only 3 weeks into the full COVID 19 pandemic, however we have already had many calls of distress and the unfortunate confirmation of job loss from tenants.
There is also confusion in the market as to what you can and can’t do. There are different rules for handling residential rental disputes and commercial property disputes. Yesterday the Federal Government released a MANDATORY CODE OF CONDUCT SME COMMERCIAL LEASING PRINCIPLES DURING COVID-19
Property Manager Agents may still conduct:
- Private inspections of residential properties with individual potential tenants
- Open inspections of residential rental properties are now banned
- Anyone inspecting a property must obey social distancing rules, including staying at least 1.5 metres apart. If you must attend a property, practise good personal hygiene including:
- Cleaning your hands thoroughly for at least 20 seconds with soap and water, or using an alcohol-based hand sanitiser
- Covering your nose and mouth with a tissue or a flexed elbow when coughing or sneezing.
Estate agents conducting any inspection should ensure compliance and high levels of hygiene. This could include ensuring properties (particularly high traffic areas such as door, cupboard and wardrobe handles and stair rails) are clean and disinfected.
Some Victorians may suddenly be unable to make their rent payments. They should notify their landlord or agent as early as possible. If they can agree on a payment plan with their landlord for any rent arrears, they should put the agreement in writing.
The Government has now put in place a 6-month moratorium on evictions. This does not mean that tenants no longer have to pay rental and there was no mention in the Prime Ministers address of rents being reduced. During the next 6 months if a tenant is facing hardship its important for tenant and Landlord to work on a solution together. Any agreed reduction in rent should be proportioned against any loss of income before this can be agreed . The tenant also must first provide proof for their hardship which may include a letter from their employer and/ or separation certificate and exhausted all of the Government hardship provisions which have been provided by Consumer Affairs Victoria. See below.
If Landlord and tenant agree to a reduced rent for say 3 months or longer this is not rent forgiven. It simply means a reduction in rent for a period with that amount outstanding to be deferred and repaid in addition to the usual rent once the agreed period of deferment has expired. One must remember also that Landlords too maybe affected and they too have mortgage commitments to maintain.
We encourage landlords with landlords insurance policies to check the loss of rent provisions in their policies. I am aware that in some cases where a rental reduction has been agreed it may cause to invalidate an insurance claim.
The Prime Minister has recently stated that landlords and tenants need to sit down together and agree to a resolution concerning payment of rent over the next 6 months. Some tenants will have just cause to delay payment of rent, however, Landlords too have obligations and commitments with most relying on this income to meet mortgage commitments
There is no silver bullet but over last 24 hours a guideline has been released by the Federal Government called the Mandatory Code of Conduct
This Code applies to all tenancies that are suffering financial stress or hardship as a result of the COVID-19 pandemic . Eligible Tenants must
(a) Have a turnover of less than $50 million; and
(b) Have a 30% or greater loss in revenue.
The key principles of the Code are as follows:
- Landlords must not terminate leases for non-payment of rent.
- Tenants must continue to comply with their lease obligations otherwise tenants will jeopardise the protections provided by the Code.
- Landlords must offer tenants proportionate reduction in rent in the form of waivers and deferrals based on the reduction in the tenant’s trade..
- The Landlord must pass on any reduction it received in statutory charges (eg land tax, council rates).
- The Landlord must not charge fees or interest on rent or payments being deferred.
- Landlords must not draw on a tenant’s security (bond, bank guarantee or personal guarantee).
- Landlords should allow tenants to extend the lease for the period the subject of the rent deferral.
- Landlords to freeze rent increases (other than turnover rent in retail leases) for the duration of the COVID-19 pandemic period and a reasonable recovery period after it passes.
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