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It goes without saying that COVID-19 has been a source of stress for owners and tenants in 2020. We’ve come a fair way since April and the outright 60 day stop on evictions for rent arrears.
But the NSW government’s recent residential tenancies amendment and extension of the eviction moratorium means that landlords are subject to new eviction rules in NSW until 26 March 2021.
Let's break down what this means for property owners going into 2021:
What is the Residential Tenancy Moratorium on Evictions?
To shield renters, the NSW government has recently extended some new measures for when landlords can evict tenants who have fallen behind in their rent as a result of COVID-19.
Originally, the restrictions were set to end in October, but now it looks as if they’re set to run till around the end of March next year.
So, what does that mean for owners?
Essentially, the NSW Tenant's Union states that property owners can only move to evict impacted tenants for rental arrears if you can show that:
- You have taken part in ‘good faith’ rent reduction negotiations, but were unsuccessful in reaching a mutually agreed outcome; and,
- Formal negotiations via the Fair Trading dispute resolution process have failed
Unfortunately, negotiations don’t always work out. In that case you can always apply for a termination order through the NSW Civil and Administrative Tribunal (NCAT) who will have the final say.
When conducting negotiations…
Make sure you stay clear of giving unlicensed financial advice to your tenants, or the Australian Securities and Investments Commission (ASIC) might apply fines and penalties.
As always, make sure you and your tenant are on the same page, knowing whether you’re agreeing to a deferral (paying back all or part of the arrears in the future), or, a waiver (not having to repay an agreed amount of the arrears), is a must.
What about owners in the financial rough?
Luckily, if you’ve come to a reduced rent agreement with your impacted tenant, you might be able to make up the difference elsewhere.
1. Land Tax Relief
Say you’ve reduced your tenant’s rent for any period between April 1st and September 30th, and/or, October 1st and December 31st, then there’s a few ways you could be compensated:
- A reduction on your 2020 land tax liability of up to 50%
- A refund on your land tax up to the amount of rent reduction you’ve passed onto your tenant
- A reduced amount on your land tax payable for 2020 (if you haven’t yet completed your payment)
You can apply for all of these through the NSW Government's COVID-19 Land Tax Relief Scheme. Applications are open up until 31 January 2021, but only if you waive the arrears and don't require your tenant to pay back the shortfall in the future.
2. Negotiate with your financial institution
Whoever provides your mortgage can help you out! You might be eligible for a mortgage freeze or reduced mortgage payments for a time. Reach out and show them you’ve given a rent reduction to your tenants and they can come up with some good options.
And if you aren’t quite satisfied with the decision, you can always go to their internal dispute resolution service, and then the Australian Financial Complaints Authority after that, if you’re still looking for a better outcome.
However, the Moratorium on Evictions doesn’t always apply
If you’re feeling a little boxed in by these new measures, don’t worry. There are still a handful of circumstances where you can go right ahead with the usual termination processes.
You can find the complete list on the Fair Trading site, but here are a few:
- Non-payment of rent by a tenant who isn’t impact by COVID-19
- Owner is suffering financial hardship
- Owner decides to sell the property
Let :Different help you stay on top of new rules and regulations through COVID-19
Our local property experts will ensure that you’re staying on top of the legal requirements at all times, allowing you to have a hassle-free new year!
Disclaimer: The information on this website is for general information only. You should consider seeking independent legal, financial, taxation or other advice to check how the website information relates to your unique circumstances. :Different and Real Wealth Australia are not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly, by use of this website.