What COVID-19 means to Landlords and Tenants
Firstly, we hope that you, your family and friends are safe and well during these very challenging, uncertain and ever-changing times.
2020 will be a year etched into our history books, as a time that changed everything as we once knew it.
The COVID-19 pandemic has affected almost everyone around the world in some way, and as a managing agent, we are very aware, and understand that landlords have become a high-risk category of people to be impacted greatly by these times, causing financial stress and uncertainty in moving forward..
We believe, the key issues that everyone is trying to navigate and understand are around the management of:
• Rental payments or rental arrears
• Inspecting properties
• Tenant vacates, and
• Moratorium on evictions
As you can appreciate, the questions that many are asking, may not have a definitive and clear answer at the time of writing this newsletter. However, we wanted to touch on a generalised understanding of the areas that we know are currently concerning landlords, tenants and agents.
Rental payments or rental arrears
For a tenant to request any financial consideration from their landlord, they must first prove and provide evidence that their income has been directly and adversely affected by COVID-19.
A landlord is not obligated to provide rent relief for every tenant request. The tenants who have been financially impacted by COVID-19 are simply required to discuss and attempt to negotiate a fair agreement between all parties. During this process, landlords must also take into consideration any impact that a rent reduction could have on an insurance claim, as well as, if they can actually financially sustain offering rent relief, which does not have to be a set rent reduction for a period of time. Everyone’s circumstances are constantly changing with the potential of gaining new employment, tapping into savings and taking advantaged of government assisted packages, just to name a few.
If you as a landlord are encountering financial hardship, you may like to consider offering your tenant a similar package to the commercial rent relief where the tenant is given a concession in rent for a period, followed by a further tenancy term where the rent is amortised and they must pay it back.
Rent is $500 per week. You offer rent relief of $350 per week for 1 month (4 weeks) or more, (which can be re-accessed/negotiated). The rent reduction of $150 per week ($600) is then amortised over 3 months (13 weeks) or more, with the new rent being $546.15 per week.
Entering the tenant’s home in these times of potential health risks, must be taken into consideration. While each State is introducing their own entry guidelines, there does appear to be a clear common-sense agreement where you can enter the property by mutual agreement or by the way of a virtual inspection, which is becoming an effective way of keeping in touch with the condition and maintenance requirements at the property.
At this stage, tenants can continue to move into a property and vacate a property, until further direction is given by the government.
Moratorium on evictions
It has been breaking news in many States that no tenants can be evicted from their property for a period of up to 6-months. Once again, this is only for eligible tenants who have been adversely affected by COVID-19 and there are additional conditions to protect landlords that vary from state to state.
We really are all in this together…some tenants are struggling to pay the rent; some landlords are struggling to pay their mortgages and as a managing agent… we rely on the rental income to pay our property management team members.
Let’s all work together… and hope that these challenging times pass sooner rather than later.