Government backflip achieves equitable outcome for landlords and tenants

“At its core, our Everyone Matters in Real Estate campaign really resonated with every investment property owner’s right for protection, too, during the COVID-19 pandemic. The response was incredible, their voices have clearly been heard and the Palaszczuk government has listened,” said Antonia Mercorella, CEO of the REIQ. 

Ms Mercorella believes the new amendments strike a fairer balance between tenants and landlord, although she highlighted the needs of tenants.

“We have always supported special protections for tenants during COVID-19. That has never been in question. However, what was essential were special protections that supported the safety and stability of housing for all Australians — meaning any relief in hardship conditions for tenants was also required for landlords.”

Ms Mercorella said everyone is important when it comes to real estate, with a stable real estate sector being critical for the Australian economy due to consumer confidence, shifts in sentiment for government revenue and the jobs it provides.

“For the Palaszczuk government’s COVID-19 Emergency Response Bill 2020 to be successful, it was critical that the special amendments provided protections for all parties, including landlords. 

“Many mum and dad investors can barely cover the various costs associated with owning an investment property even with rent coming in.

“There are also many self-funded retirees whose only source of income is derived from an investment property.

“As the industry peak body, had we not campaigned for the changes necessary to achieve more fair and balanced protections for all parties, the Queensland government’s original proposals would have placed countless families into financial hardship, at risk of bankruptcy and forced to sell their properties.”

Changes to the COVID-19 Emergency Response Bill 2020

1. A tenancy will be deemed to be “COVID-19 impacted” if a tenant is impacted by COVID-19 in certain ways and, in addition, the tenant has suffered a loss of income of 25 per cent or more, or the rent payable is 30 per cent or more of a person’s income. Importantly, if there is more than one tenant or resident under the residential lease, the tenancy will be COVID-19 impacted if each of the tenants or residents has suffered or is suffering excessive hardship and there has been a loss of 25 per cent or more of the combined total income for all tenants and residents, or the rent must be 30 per cent or more of the combined total income of all tenants and residents. For this purpose, income is the total weekly income after tax, including any government payments.

2. If a tenancy is COVID-19 impacted, the tenant/s have the ability to enter into rent negotiations with their landlord in good faith, with the requirement of providing appropriate documentation of financial hardship. The parties should try to negotiate a new rent amount that is reasonable and affordable, based on their changed circumstances, as well as any conditions including whether any rent repayments need to be made and the time frame for the rent adjustment. Each negotiation should also consider the circumstances of the property owner and any hardship they may be experiencing.

3. A tenant will be protected from eviction if they cannot pay some or all their rent because they are suffering or have suffered excessive hardship because of COVID-19 between 29 March and 29 September 2020 and their fixed term must be extended to at least 30 September 2020, unless the tenant/s request a shorter term. 

4. Despite the extension mentioned at item 3, tenants and property owners can end tenancy agreements for approved reasons. For property owners, a two-month notice for a tenant/s to vacate premises can be issued if:

• the property owner is preparing to sell the property and the preparation requires the property to be vacant or they have entered into a contract for sale of the property with vacant possession; or
• the owner or a member of their immediate family needs to move into the rental property.

In addition, tenants can end a tenancy agreement with or without grounds after providing the required notice. While all existing approved reasons to end a tenancy remain unchanged, new temporary approved reasons during the COVID-19 emergency period now include:

• if the tenant or resident believes they can no longer safely continue to occupy the rental property because they are experiencing domestic and family violence; or,
• within the first seven days of moving into the rental property, the tenant finds the property is not in good repair and unfit for human habitation.

5. Eligible tenants who need to end their fixed-term lease early because of COVID-19 impacts will have their break lease costs capped at the equivalent of one week’s rent, after giving the required two weeks’ notice period to end the tenancy. To be eligible for capped break lease costs, the tenant or co-tenants collectively must have lost 75 per cent or more of their income and have less than $5,000 in savings. The tenant/s may be asked to provide information to support that they meet these eligibility requirements.

6. New entry provisions into rental properties are in line with public health directives and advice, and permit:

• routine repairs or to carry out maintenance of the premises (including the inspection of repairs);
• emergency repairs which are deemed an essential service (including the inspection of repairs);
• to show the premises to a prospective buyer or tenant;
• to allow access for valuations of the premises to be carried out;
• if the landlord or property manager believes, on reasonable grounds, the premises have been abandoned; or
• if the landlord or property manager has issued a tenant with a notice to remedy a significant breach of the agreement and a follow-up inspection of the premises is required.