Although limited, there has been discussion on further amendments to legislation to allow for a reduction of rent payments for tenants who are increasingly becoming more vulnerable to unemployment or loss of wages. In addressing the media on Friday last week (20 March 2020), Prime Minister Scott Morrison outlined the need for state governments to ensure new tenancy legislation is protecting both commercial and residential tenants in these “hardship conditions” over the next six months at least. Brief mention of this was further discussed in a further press conference on 24 March 2020, with assurances that more clarity would be provided on this relief by the end of the week.
Senior Policy officer of Tenants Union of New South Wales, Leo Patterson Ross, commented on the potential of an eviction pause and advocated for legislation to consider further rent assistant increases or, in some cases, the reduction of rents. Ross insisted on this epidemic to be “a whole community problem [which needed] whole community solutions”.
Such solutions, he argued, implemented mainly by big banks and mortgage lenders, would see the deferral of loans and mortgages for up to six months. However, there would inevitably be landlords not passing on the relief of these deferrals to their renters. Legislation would require that all landlords would share the benefit of loan deferral to reduce the strain on household incomes.
In addition, Commonwealth Bank’s chief executive Matt Comyn has revealed CBA’s intentions to offer $250,000 loans where no repayments would be required for 6 months. Significantly, fifty percent of these loans would be guaranteed by the federal government including no interest charged on the loan itself unless the money is used. Other big banks like NAB, ANZ and Westpac have followed suit with similar options available for their customers. These considerations made by big banks will temporarily allow Australians to gain balance after the economic fallout caused by COVID-19.
Of course, at the time of this article, there is plenty of commentary from the Prime Minister, Government Officers and market leaders, but no clarity on what sort of relief would be provided, which clearly needs to be able to assist both the tenants (who may be under financial distress and need relief from rent) and the landlords (who may be heavily reliant on rental income to avoid financial distress).
At this stage, it is a waiting game. There are policies and potential legislative changes that will allow Australians to weather the upcoming few months, but it is beyond these initial months where the endurance, financial capacity and ability of all Australians, including tenants and landlords, will be tested. We are eagerly awaiting details of the landlord tenant relief, to assist our clients with understanding the relevant law surrounding the relief, and its practical application to existing legislation and lease documentation. We will publish updates when Parliament provides further clarity on this.
For the landlord and tenant needing legal advice on anticipated hardship, contact us.