Good Evening to all our landlords
Announcing the ‘Residential Tenancies and Rooming Accommodation (COVID-19 Emergency Response) Regulation 2020…….With much joy and anticipation we have a ‘Bill’ signed, sealed and delivered!!!!
The matter was debated over in Parliament last night for 3 hours and it was finally approved just after 10pm. They say negotiation is tough, but haggling over each detail our industry needed to cover is even tougher and thanks to our industry and the REIQ we now have a more balanced and fairer framework that provides protection for both landlords and tenants.
With the devastating flood last year and financial and health crippling COVID-19 this year, our industry certainly has a mountain of patience and humility which has made us better at dealing with natural disasters and now a pandemic.
Everything explained to you in my email dated last Friday 17th April 2020, still stands so we must thank Minister deBrenni and the Queensland Government for sticking to their word and not disappointing our industry at the 11th hour.
Whilst the Bill has passed, there is a process for it to become Legislation. Part of the process is the creation of the ‘Guidelines’. The REIQ are working with the Department of Housing to establish the Guidelines and they have made exceptional progress. The REIQ are expecting to be able to provide us with a copy of the Guidelines tomorrow. The Guidelines will be comprehensive and easy to read and easy to understand. They will be capturing every scenario and the action to be taken should the tenant be affected by COVID-19.
We will have a whole new set of documentation that will be used when dealing with COVID-19 affected tenants. The first of the documents and the most important to begin negotiations and discussions is a ‘Show Cause Notice’. Should a tenant contact us and advise they are unable to honour their responsibilities to the lease due to COVID-19, the new law requires them to complete a ‘Show Cause Notice’. This document compels the tenant to communicate with us. Once we have received this notice, we can commence discussions with the landlord.
To establish whether a tenant is eligible to be considered to be affected by COVID-19, they need to prove at least 1 of the following:
1. The tenant must have suffered financial hardship due to COVID-19 if one of the following apply:
(a) they or someone they care for is diagnosed with COVID-19;
(b) subject to a quarantine direction;
(c) a public health direction has closed their employment or restricted their employers trade or business;
(d) they are self isolating because they or someone they live with or they are a primary carer of someone who is a vulnerable person;
(e) unable to work due to a travel restriction under a health direction preventing them from working;
(f) they have been prevented from leaving or returning to Australia;
2. The person has suffered a loss of income of 25% or more;
3. The rent payable is 30% or more of a person’s income.
The above is considered and assessed on the total income of all tenants on the lease. The definition of income includes jobseeker, jobkeeper and any government grants and incentives the tenant receives.
If a Tenant does not qualify for at least one of these criteria, then they are not eligible to be treated under the new COVID-19 protection legislation.
Once we have substantiated that a tenant has been impacted by COVID-19, then we will commence discussions with the property owner, as follows:
1. If a tenancy is subject to a rent negotiation by way of a decrease, it is definitely in the owner’s best interest to negotiate than not at all. We need both parties to be reasonable and we need to achieve a positive outcome as quickly as possible. You all need to understand that if a tenant cannot pay their rent, we cannot evict them so it is in your best interest that we agree to a rent so you receive some money than no money. If an agreement cannot be reached then we proceed to conciliation and I do need to point out this will take weeks to get a conciliation date as I am predicting the Residential Tenancies Authority (RTA) will be bombarded with requests. It is important to note that the conciliation is not binding unless the parties agree. If the parties do not agree in conciliation, then the next and final step is taking the matter to QCAT to follow the Court process. This again will be a very lengthy process and you could be waiting months for a hearing date. It is our recommendation that we manage the negotiation process between the landlord and tenant as easy and pain free as possible to avoid further angst by conciliation and court hearings.
2. If the landlord does reduce the rent, you can also make an agreement with the tenant to pay back the amount you reduced it by at a later date. You may also choose to waive the amount you reduce it by understanding that a lot of tenants may not be in a financial position to pay back the loss to you.
3. If the rent has been reduced, there is an exemption that the existing bond amount which is equivalent to 4 weeks bond remains at the higher amount. Normally when a rent is adjusted, the bond is adjusted according to the new rent. In this instance, the bond amount will not change and will remain in place at the original amount.
4. Any change to the rent needs to be done by way of a Variation Agreement. It is our recommendation that this be made on a short term basis and then assessed at the appropriate time before the time period has expired. Each tenancy needs to be assessed on a case by case basis and of course each landlord’s financial ability to assist. We also want to ensure that should a tenant’s situation change and they are fortunate to return to paid employment, that the original rent is returned.
There is a change to the proposed package from last week in regards to the Moratorium on Evictions as follows:
Should a tenant’s lease expire within the moratorium period, then the tenant automatically receives an extension to 30th September 2020 UNLESS the landlord is moving into the property or their relatives are moving in or the landlord needs to sell the property as they have also suffered financial stress due to COVID-19. In this case, we can issue the usual 2 months notice.
Furthermore, the automatic extension of a lease to 30th September does not extend to periodic leases. Tenants need to be on a fixed term lease to be eligible for the extension.
If a Tenant is COVID-19 impacted, they cannot be listed for rent arrears on TICA (tenant database).
There has been an addition to the legislation that was not included in the previous package. This relates to Domestic and Family Violence and special considerations for vulnerable tenants who are victims of domestic violence. A tenant in this situation can leave the home with 7 days notice. We do however require a copy of the Domestic Violence Orders, Protection Orders of Injunction for this to occur. This new law allows for tenants at risk to leave their home quickly and make themselves safe. The REIQ has shared with us that since COVID-19 there has been an increase of 75% of searches on the internet for Domestic and Family Violence and a range of support groups have reported a massive spike in calls for assistance.
The REIQ believes this new framework preserves your insurance if the tenancy is not affected by COVID-19. They further believe if the reduction of rent is agreed to be paid back and the tenant does not pay it back, you will be covered under your landlord insurance for a claim. This of course is the REIQ’s understanding, however, for all landlords with affected properties, we will need to speak to your landlord insurer directly to establish this.
We need to be clear that if a tenant is not impacted by COVID-19, then the new legislation does not apply. They will fall under the original legislation.
With all this in mind, we are positive that the majority of our tenants will not be affected and will honour their responsibilities under the Lease. We will of course have some tenants that have unfortunately lost their income source through no fault of their own and do wish to honour their responsibilities so they may need some assistance with a time extension for rent payments. Some tenants will be seeking a reduction as they will not be in a position to pay the market rent. We will be working closely with both the tenant and the landlord to come to an acceptable agreement for both parties.
Trusting the information I have provided you with is easy to interpret, however, as this is an overview, the intricate details in dealing with each scenario will be provided for in the Guidelines and should your tenant be considered COVID-19 affected, we will advise you appropriately based on the issue at hand and in your best interest. For the majority of you, life will proceed as normal for your tenants.
We are now living in a new world with a new framework so we intend to make the best of the tools and guidelines we have been given.