Landlord & Tenant Relief during COVID-19

On Sunday night (29 March 2020), after another meeting with the National Cabinet, Prime Minister Scott Morrison has announced further advice on relief for tenants and landlords struggling to keep up with rental payments. This comes as many workers are left unemployed following the ramifications of COVID-19. Many Australians, having lost their jobs, may now be facing difficulty keeping up with rental payments. The domino effect may lead to landlords losing rental income, and banks losing out on loan repayments.

Most notably, Mr Morrison announced a moratorium on all evictions, both of commercial and residential tenancies, for the next six months. Additionally, banks can no longer foreclose properties as a result of landlords’ inability to meet loan repayments. This would follow state and territory arrangements that Mr Morrison conceded were yet to take place. However, it was made clear in the words of Mr Morrison that both landlords and tenants (and potentially, the banks) should be prepared to “to sit down, talk to each other… work this out,” and reach agreement. It was affirmed that businesses were intended to reach the end of the pandemic of COVID-19 and be able to go on and employ people. Commercial landlords, therefore might be saved by “hibernation” plans currently being considered for small businesses.

Hibernation would allow for small businesses to, in a sense, raincheck all rental payments, debt and other liabilities to ensure that they can “start again on the other side”, explained Mr Morrison. This essentially freezes all commitments required of commercial tenants to pay rent which would allow for the economy to continue strongly after the pandemic ends.

Therefore, it becomes necessary to consider bespoke agreements between tenants and landlords to deliver tailored measures in paying and receiving rent. A bespoke agreement would allow for both parties to identify the issues that they face in uncertain times and, if necessary, negotiate to reach an equitable arrangement. As suggested by Mr Morrison, this type of discussion between landlords and tenants needs compromise in order to relieve the pressure faced by both parties.

Some of our recommendations to tenants and landlord in this season is to:

  1. Engage in this process with a spirit of compromise and come up with an arrangement to “share the pain” of the pressure faced by both parties;
  2. (Where necessary) Develop a business or hibernation plan for discussion at the meeting;
  3. Document the agreement, with appropriate terms and procedures to allow for the parties to emerge from the Covid-19 pandemic.

Need landlord tenant relief?

If you are seeking landlord tenant relief and need urgent legal advice, we have tailored a package that can help you (see below).

Written by James Tan, Kerry Copley and Ervin Hii (student placement)

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