Landlords and Covid-19 – helping your tennant, helping yourself.

House with Signage outside of For Rent

By Julie Nipperess

If you’re a property investor affected by Covid-19 because your tenant can’t keep up with the rent, the good news is that you can both get financial help at this time.

If you have an investment property that’s managed by a property manager, then your agency should be well informed of the rental assistance that’s been put in place to help tenants who are struggling to pay rent during Covid-19.

Rental arrangements are legislated by each state, and some are still putting in place specific legislation, the Northern Territory for example, but the common theme across the board is that Landlords need to be negotiable at this time.

There is a moratorium on evictions during Covid-19 and some jurisdictions have put in place restrictions around property inspections too, at this time, so check your own state or territory for the finer details. Each state has a residential rental authority, for example, in NSW agreements between tenants and landlords are overseen by Fair Trading. In Queensland it is the Residential Tenancies Authority. On their websites, you can find all the information you need.

Rental agreement form with signing hand and keys and pen

Rental assistance for residential tenants


The good news is that across many jurisdictions there are financial assistance packages available for either tennants or landlords, \or both.

In Victoria, Western Australia and Queensland there are specific government grants that tenants and landlords can apply for to assist with rental payments at this time.

In Tasmania too, the government has made funding available for landlords and tenants facing financial hardship.

In South Australia and New South Wales there is no specific rental assistance for tenants but in New South Wales landlords can apply for land tax relief. In the ACT there is also tax relief for landlords who lower the rent.

Man with laptop while talking on phone

Options for landlords


When negotiating with your tennant, don’t forget that you will have other bills associated with the property – this is not just about covering the mortgage, it’s about making sure you can pay strata fees (if applicable), as well as insurances and rates. Bear this in mind, and encourage your tenant to keep paying rent, if they can. And keep a note of your negotiations – follow up any phone calls with an email.

Mortgage Property Login Page Web Graphic Concept

Mortgage


Contact your bank and put your mortgage payments ‘on hold’. These mortgage payments don’t magically disappear, they’re built into the ‘back-end’ of your mortgage. But banks are being very flexible right now so it’s worthwhile applying. This way, if your tenant can’t pay you’re not in danger of defaulting on mortgage payments yourself, or having to really stretch your own finances. Remember too, that interest rates are low, and all of the indications are they will stay low for quite some time to come.

Renters insurance

Insurance


Many Landlord insurance policies do cover ‘loss of rent,’ for a capped period of time, so it is worthwhile checking your policy or calling your insurer to see if you’re entitled to make a claim.

Happy young couple relax on sofa read paperwork

Local Council Rates


All local councils have a financial hardship policy, and some may even have put in extra measures at this time to help people who have lost their jobs or had income reduced.

Check your local council website to see if you can defer the rates without penalty.

Commercial property


If you own a commercial property, the rules are different again, and these are also mandated on a State and Territory basis, but the Government has set out an overarching policy that decrees:

Commercial property
  • landlords must not terminate leases for non-payment of rent during the COVID-19 pandemic (or reasonable recovery period)
  • tenants must stay committed to their lease terms (subject to amendments)
  • landlords must offer reductions in rent (as waivers or deferrals) based on the tenant’s reduction in trade during COVID-19
  • benefits that owners get for their properties (e.g. reduced charges, land tax, deferred loan payments) should be passed on to the tenant (in the appropriate proportion)

Importantly, it also states that Australian and foreign banks, along with other financial institutions operating in Australia, are expected to support landlords and tenants at this time. 

Don’t panic!


Above all, don’t panic. There is lots of positive news that we are significantly “flattening the curve” and lockdowns are already starting to ease. The economy, and more specifically, employment, will lag for a while longer. But in the meantime, by putting in place strategies to help your tenants, and protect your asset, you can stay in control over the coming months.

If we can help, contact us.

Need more information? Get in touch with Step Up Financial