Good evening to all our Landlords
As I am typing this email to you, it is being done with a smile and sense of absolute relief. The long and stressful campaign by our industry and the REIQ has worked a treat!!!!!
This week, the Premier’s Office has received hundreds of thousands of letters and I wish to thank each and everyone of you who contributed to that number. After the overwhelming reaction to the proposed package, the Palaszczuk Government invited the REIQ to a meeting to discuss the proposed framework today. The discussions of this meeting were extremely proactive and pleasing to our industry.
DeBrenni has formally announced the revised framework based on negotiations and discussions involving the REIQ. DeBrenni has also provided the REIQ with a formal letter confirming the changes to the Queensland Government’s original proposed package.
Further to my email earlier in the week, I am pleased to advise the following changes to the package:
Rent – We have been extremely concerned with the original proposal that if a tenant was unable to pay rent, then the rent is to be negotiated and the tenant does not have to pay back any of the rent arrears. This has now changed and under the revised framework, this will now be a matter to discuss and an agreement made between the landlord and tenant. There will be no mandated requirement for landlords to agree. There will no longer be a permanent rent waiver BUT rather a rent deferral unless the parties agree otherwise.
Proving financial hardship – As you would be aware, we were concerned that tenants were not required to provide documentation to substantiate their request for a rent reduction. Our concern was that landlords were expected to simply take the tenants word in an effort to make a decision affecting the financial stability of your investment property. It is now appropriate for the tenant to provide documentation to substantiate their request. Where a tenant cannot pay the original rent stipulated in the lease, we can now obtain all the relevant information and consider what has changed for the tenant and the severity of the changes to be in a position for you to make a more informed decision instead of flying blind. Being able to now demand evidence of financial hardship, will also increase the success of negotiations without the need for conciliation.
Entry requirements – Originally, the announcement suggested tenants could deny entry for anything other than emergency repairs. Emergency repairs are extremely important for the safety of the property and the tenants, but effectively the tenants could decide if they would allow entry for anything else. It has now been confirmed that all legal and statutory related maintenance ie: smoke alarms, pool compliance etc. must be done and the tenant cannot restrict access.
Routine inspections – Previously, we were not permitted to carry out routine inspections at your investment property. We are still not permitted to carry out physical routine inspections, however, we are now permitted to do the routine inspections via a virtual inspection with the tenant. Accordingly, we will be recommencing routine inspections on Monday and this will be done by a tenant assisted virtual inspection via a smart device. The tenant cannot refuse this inspection and they must participate. A link will be sent to your tenant and they will be requested to assist in completing the inspection. They will take photos of the property and be able to make comments regarding any maintenance items they have or items they want you to be made aware of. Of course this is not as effective and precise as our physical routine inspections with our eyes on your property, however, the opportunity to do virtual routines is better than no routines at all to bring a sense of relief in ensuring your property is being maintained. Our office will forward you the virtual report once your tenant assisted routine inspection is carried out.
Break Leases – We were concerned with the introduction in the original package which allowed the tenant to break a lease with only 1 weeks notice. Today the REIQ reached an agreement with the Queensland Government, that in order for a tenant to qualify for breaking their lease with only 1 week’s notice, the tenant needs to be in extreme financial hardship which is defined as a reduction of 70% or more in relation to their income and they also have to have savings of less than $5,000 available to them. If a Tenant meets this criteria and wants to break their lease, they will be considered to be in serious financial distress and it is our recommendation that tenants in this situation are given the ability to break their lease because if a tenant is in proven financial hardship, they would not be in a position to pay you rent.
Eviction Moratorium – originally the moratorium on evictions was for 6 months and if a lease ended during this period, then the tenant had an automatic right to a further 6 months on their lease period. This protection measure went too far and it would in fact extend the moratorium from 6 months to 12 months. If the rent was permanently reduced for this period, then a landlord would be in a relationship with a tenant on a drastically reduced rent which will have a major impact on the financial hardship of the landlord. This has now changed and it will now be an eviction moratorium of only 6 months. A fixed term lease can only be extended to 30th September 2020 and that is it. On that date the parties can negotiate to end the lease or extend the lease by mutual agreement.
This is a much fairer package and now in alignment with what the Federal Government originally announced.
The REIQ supports the principal that both landlords and tenants need to be looked after. With the current changes, this returns us to a position where we can work in a more respectable fashion and protect your interests. I need to point out that there will still be some pain for landlords but certainly these changes have lessened the pain.
This may still seem a little vague in how it will all come together and work because I am sure everyone has questions that have not yet been addressed. The key principles of the framework have now been agreed to and what will happen now is a set of guidelines will be developed. There will be one set of guidelines for everyone ie: landlords, tenants and property managers. The REIQ will work closely with the Department of Housing to ensure the guidelines are practical and comprehensive with clear procedures and documentation. For anyone looking for further clarity and guidance, it is coming and will be contained in the Government’s guidelines. The Amended Bill will go to Parliament on Wednesday. The Queensland Government has promised to provide the REIQ with a copy of the Bill ahead of time for the purpose of full disclosure. Once the Bill is passed on Wednesday, the REIQ will work closely with the Department of Housing to ensure nothing slips between the cracks because the detail of the guidelines is vitally important.
Well on a positive note, I wish you all a wonderful weekend and as always, if you have any questions, please reach out to me and I will do my best to answer them as best I can until the guidelines are in place.