COVID-19 – Queanbeyan Residential Tenancy 2020
The COVID-19 impact for all landlords has not been the same. In the Queanbeyan area we have not seen anywhere near the impact that other agencies across Australia have experienced. This is likely due to our region not being a big tourism, retail or hospitality area nor having large numbers of tenants that are here to study.
NSW Parliament passed the COVID-19 Legislation Amendment (Emergency Measures) Bill 2020 which prohibits terminating tenancies or enforcement of vacant possession for a period of 6 months (or less if the situation changes). The new Residential Tenancies Amendment (COVID-19) Regulation 2020 has been published & prescribes that tenants are required to provide evidence that their household income has been reduced by 25% or more in order to pursue rental negotiations.
If we are contacted by one of our tenants & advised that they have been stood down, terminated or had their hours reduced due to COVID-19, the tenant will be required to complete a Rental Impact Form & we will then immediately contact the landlord to discuss their options.
All tenancies must be assessed on a case by case basis. Landlords can consider reducing or deferring rental payments as agreed with their tenant & then when circumstances change, it will be possible to revert back to the usual rental amount (without having to provide any notice period). It has been widely speculated that the expected period would be around 6 months for some circumstances.
The Commercial Leasing Code provides a framework for Retail, commercial & industrial tenancies & in order for the tenant to start the negotiation process they must have met the 30% downturn in trade threshold. There is then a proportionate reduction in rent based on the decrease in trade with a waiving of 50% of the rent reduction & an option to defer the balance. This is not the case for residential tenancies in NSW.
The threshold prescribed in the new Residential tenancies regulation provides for negotiations to be initiated where a tenant has a total household reduction of 25% or more. There is no prescription for waiving any rent amount & the negotiations are expected to range between rent reductions & extended repayment terms. No termination notices can be issued to impacted tenants for 60 days & then only after ‘good faith’ negotiations have taken place & it is considered ‘fair & reasonable’ to do so. There is also an increase to the amount of notice that needs to be given for end of fixed term agreements to 90 days.
Ultimately, there is no longer any option for landlords to issue a termination notice for rent arrears or seek a tribunal hearing, let alone effect an eviction, without having worked through the prescribed process. The guide will basically mean we need to work out what the tenant can realistically afford & unfortunately this will be our best case scenario until the pandemic ends. Most impacted tenants will fall into an affordability price range based on the relevant Government assistance program that they are entitled to. A commonly used statistic is that 30% of the household income would be required towards rent but this calculation is not formally prescribed in the new legislation.
The situation has been evolving each day for everyone & our property managers are working hard to provide our landlords with the best advice possible.