COVID-19 and Your Rental Property
Residential Tenancies (COVID-19 Response) Act 2020
On the 30th March 2020 the Prime Minister, Scott Morrison announced a moratorium on rental evictions for 6 months – the real estate industry took a collective deep breath on how this announcement would be managed on a state level. Our state government worked on a bill that has since become legislation (23 April 2020), that covered the Prime Minister’s announcement.
During this COVID-19 emergency period it has become apparent that real estate agents have needed to work fast and hard to understand and implement changes to ensure owners and tenants are all operating within this new legislation. Now, more than ever, it’s become evident that the need to have a professional managing your tenancy to relieve the stress of navigating changes in an ever changing environment, is paramount.
Below is an overview of the legislation that has been passed during the emergency period. If you have any further queries about the , please feel free to complete and submit your question at the bottom or click here.
On 16 April 2020 the State Government introduced to Parliament the Residential Tenancies (COVID-19 Response) Bill 2020 and the Bill received Royal Assent on 23 April 2020 therefore becoming legislation and an Act.
The Property Management Team and I have worked through the Bill over the past 2 weeks and how it will impact the management of your property and we are very comfortable with what we have been doing for you during this time and moving forward.
An Overview of the Residential Tenancies (COVID-19 Response) Act 2020 (ACT)
- regulate, in response to the COVID-19 pandemic, certain residential tenancy agreements, long-stay agreements and accommodation agreements; and
- to modify, in response to the COVID-19 pandemic, the operation of the Residential Parks (Long-stay Tenants) Act 2006 and the Residential Tenancies Act 1987; and
- to provide for the manner in which disputes arising under the Act are to be dealt with; and
- to amend the Residential Tenancies Act 1987; and
- for related purposes.
The ACT is enforced during the “emergency period” from 30 March 2020 to 29 September 2020, though there are provisions that the later date can be changed. Most Sections of the ACT come into effect from 30 March 2020.
Rent with your current tenants cannot be increased throughout the emergency period. Any rent increases during the emergency period already in place will be deferred to after the emergency period ends. This is different from a rental deferment plan.
An owner that has financial hardship caused by the economic effects of COVID-19 pandemic or an inability to access the property due to a direction given under the Emergency Management Act 2005 or Public Health Act 2016, general repairs maintenance does not need to be completed, but any urgent or emergency repairs still need to be completed as outlined in the Residential Tenancies Act 1987 (RTA).
Any fixed term lease that expires during the emergency period is to be renewed on the same terms that applied immediately before the expiry date, If a new fixed term lease cannot be agreed upon the tenancy will automatically roll over onto a periodical lease. If your tenant’s lease expires during the emergency period, your Property Manager will go through different scenarios about renewing the lease depending on yours and your tenant’s situation at the time and moving forward. We always recommend that tenancies remain a fixed term agreement as this gives owners more security if an insurance claim was made.
Depending whether an owner and tenant have negotiated rental assistance, tenant hasn’t been affected by COVID-19 hardship or the owner and tenant have tried (successfully or not) to work through conciliation, will determine which type of rent default notice can be delivered. As always, we are keeping communication lines open with tenants to work out solutions if they are impacted during this time, so we can then work with you to find a successful outcome.
During the emergency period there are very limited provisions in the ACT for an owner to terminate a fixed term or periodical lease by giving the usual notice periods as set out in the RTA. The provisions that are in the ACT fall under the Sections in the RTA of contract of sale, frustration of the agreement, damage to the property and undue hardship – these last three would be determined through court.
The original Bill saw that any lease agreement could be ended by a tenant giving the owner 21 days notice and the tenant would not be liable for any break lease costs or lost rent borne by the owner. REIWA lobbied hard that this would have done enormous damage to the rental market, spiralling rents downwards, as tenants could just move when they found a cheaper property and this would have come at a huge cost to owners.
The ACT now ONLY allows for tenants financially affected by COVID-19 to terminate their lease with 21 days notice without penalty or paying owner’s loss of rent while finding a new tenant. The ACT is not clear how financial hardship would be determined, but we assume this would be established through the Commissioner.
While this isn’t good news, we are currently still seeing good activity in the rental market with properties leasing quickly for at least the same amount of rent.
The ACT has put in place a “Commissioner” designated as the Commissioner under the Fair Trading Act 2020 Section 55. This is an avenue for the owner and tenant to negotiate any or no rental assistance relief if they cannot come to an agreement between themselves. The Commissioner will also be the person that will permit the parties to go to court if there is a rent default, once due process has been followed. The ACT does put a burden on owners that if the conciliation process is used through the Commissioner, it could take owners longer to place rent defaults and terminations on tenants after the emergency period has finished. We will continue to work hard for you and assure you that the conciliation process will be the very last step in negotiations with your tenant.
The Premier, Mark McGowan on 23 April 2020 announced a GRANT for owners and tenants when rent has been reduced. The GRANT totalling $30 million is for a household’s rent up to $2,000 over 4 weeks rent. For example If the tenant normally pays rent of $500 per week and the owner has agreed that the tenant will pay $300 per week, then the difference of $200 per week multiplied by 4 weeks indicates a potential grant of $800.
Eligibility criteria for the tenant
- Are a Resident in WA
- Lodged a tenancy bond with the Bond Administrator
- Are a permanent resident, Australian citizen, have a temporary or permanent protection visa or bridging visa
- Live in a private residential property, rooming house or residential park
- Are in ‘financial hardship’, meaning:
• Have lost their job on or after 20 March 2020
• Have applied for Centrelink income support
• Have less than $10k of household savings
• Are currently paying rent of at least 25 per cent of the total household income after tax
- Have agreed to a reduction in rent with your landlord, or have engaged in the Residential Tenancy Mandatory Conciliation service through Consumer Protection.
Applications for tenants will be available from 1 May 2020.
Full details through DMIRS