Communication is key: that’s the message for both landlords and tenants in the wake of the national cabinet’s moratorium on evictions during the Covid-19 pandemic.
With around 32 per cent of Australian households renting from a private landlord or a state housing authority, the "moratorium on evictions" announced as part of the government's coronavirus assistance measures on 29 March came as welcome relief.
But the move—part of the government's $130 billion stimulus package—had landlords in particular scratching their heads, lost at the prospect of attempting to cover the costs of an investment property with reduced or zero rental income.
Minister for Housing Michael Sukkar went some way to offering clarity on the contentious principle this week.
“There is a moratorium on evictions but there's not a moratorium on the requirement to pay rents now,” Sukkar said.
Setting aside commercial rents—on which “our national cabinet will have more to say”—Sukkar suggested there must be an element of “sharing the pain”.
“There's a moratorium because we are in extraordinary economic circumstances, and [we] don't want to see people evicted—but that does not absolve people of their responsibility to pay the rent," Sukkar said, adding that financial measures such as the new “job keeper” payment were aimed at ensuring people could meet central costs of daily living, such as rent.
While the national cabinet is expected to formulate a “framework of minimum standards and requirements”, dialogue between tenants and landlords was encouraged.
“To the greatest extent possible we want flexibility, we want landlords and tenants, to the extent they can, working this out for themselves,” Sukkar said.
Real Estate Institute of Australia’s president Adrian Kelly welcomed Sukkar’s comments, reiterating that the measures were put in place for those in genuine financial need.
“A moratorium on evictions doesn’t mean rent is not payable, it is. If circumstances mean that payment in full is not possible it is a holding-off from payments, not a cancellation,” Kelly said.
“If you can pay your rent now, you pay it. If you can’t pay your rent now, you have been given grace for six months, but will have to catch up when you are able to pay it again.”
For both landlords and tenants navigating the uncharted waters we find ourselves in, real estate lawyer Kristan Conlon said the residential sector presented some unique challenges.
“To me it's more multifaceted than what the commercial position is—we're dealing with people's lives, people's homes and families in our community.”
Speaking at The Urban Developer's webinar on the rights of landlords and tenants in a Covid-19 environment on Thursday, Conlon it was important to find common sense solutions that work for both parties.
These could be in the form of lease amendments, rent reductions, or even "out of the box" solutions such as in-lieu rent payments—for services such as a carpenter performing required maintenance works—but be sure to get them in writing.
“I would encourage you, both parties—landlord or tenant—to agree to arrangements in writing ... not just because of the law, but because if you talk, and you put something in writing ...we're going to have less backlash at the end, less disruption and less fighting about what actually was the agreement.”
While Conlon doesn’t believe you necessarily need to go to a lawyer, her phone is “running hot” with people wanting to work through the best way to deal with things.
“I've drafted multiple letters already for tenants to give to their landlord. I'm not charging for that and I see there's a longer-term benefit to add some value now where it's not going to take me long to tell someone the answer," Conlon said.
Along with speaking to trusted advisors such as lawyers and accountants, Conlon suggests both tenants and landlords gathering information online should check state government websites and residential tenancy associations, as well as law societies and industry bodies for each of the different asset classes.
“Just make sure it's an authoritative source, and in particular where it relates to legislation or regulation, go back to the prime source.”
The national cabinet is further considering advice from state and territory governments regarding commercial and residential tenancies, and is working on the establishment of an industry code for commercial rents.