New laws are being introduced into Victoria’s Parliament to help protect residential tenants facing hardship as a result of the coronavirus (COVID-19) pandemic.
These new laws are set to come into effect to help protect tenants in residential properties from eviction, other than in exceptional circumstances, and allow for the rent to be reduced if they are suffering financial hardship.
The laws are expected to be passed by the Victorian Parliament on Thursday 23 April 2020. The laws will apply to you if you’re the landlord of a residential property.
My tenant says they can’t afford to pay the rent because of coronavirus (COVID-19). What can I do?
Under the new laws, your tenant will not be able to stop paying the rent. But they will be entitled to:
- apply to leave the tenancy if they want to for financial hardship, without paying fees for breaking the lease; or
- stay and negotiate a rent reduction with you.
Under this reform, landlords will not be able to evict tenants, except in specific exceptional circumstances (including if tenants damage the property, use it for criminal activity, or serious violence occurs).
You will still have the same responsibilities to your tenant that currently exist under your lease, including carrying out repairs.
Once affected, the new laws will be backdated to 29 March 2020. This means you cannot serve a notice to vacate for rental arrears from that date.
What financial help is there for me?
Contact your insurance and mortgage providers to determine the terms covering your situation.
Your tenants may be eligible for support under a new and dedicated $80 million in rental assistance for those facing financial hardship. Tenants may be entitled to up to $2,000 from the Victorian Government, to help cover any shortfall in their rent. This money is paid directly to your managing agent on your behalf.
To be eligible for the grant your tenant will need to have registered a revised rental agreement with Consumer Affairs Victoria, have less than $5,000 in savings and still be paying at least 30 per cent of their income in rent. In addition, the tenants combined household income must be less than $1,903 per week.
If you agree to reduce the rent, you may also be eligible for a 25 per cent land tax reduction. A deferment to 31 March 2021 may also be possible.
How do I work out the rent reduction amount?
If the tenant approaches your property manager seeking a rent reduction, we will be in contact with you. You may consider how much of a reduction you can afford. Consider the help available from the government, and other support that you might be able to get, such as mortgage relief from your bank.
Your property manager can negotiate with the tenant to reach an amount of rent that is acceptable to both of you. When you settle on an amount, get the agreement in writing.
Is there a difference between a rental reduction and a rental deferral?
Any rental reduction will not be able to be recovered – even after the Covid19 crisis has ended, it will be a permanent loss of income.
A rental deferral is an opportunity to reduce the rental for a set amount for a specified period of time, and must be repaid by the tenant after the specified period (e.g. 6 months) has passed at a nominated amount repaid each month, in addition to the usual rental amount.
It is unclear if the rental relief grant of $2000 will be applied if a rental deferral is provided.
What if we can’t agree?
If we are not able to reach an agreement, the tenant will contact Consumer Affairs Victoria, and they will be referred to a dispute resolution service.
Accredited mediators will help you and your tenant agree on a payment plan. If you still can’t reach an agreement, the disputes resolution team will be able to issue a binding order, setting out the terms of a rental agreement.
How long will my new rent be frozen for?
The laws will remain in effect for six months to 26 September 2020. You will not be able to increase the rent during that time.
Information in this article was sourced from the Consumer Affairs Victoria website on the 15th of April 2020. You should check for updates before making decisions based on this information.
What assistance will I get from my property manager?
Your Barry Plant property manager will continue to provide you will up to date information and will assist you with any negotiations and lease documentation that may be required.