‘Kick in the guts’: REIV slams rental moratorium extension

“The decision to extend the rental moratorium to 31 December 2020 without proportionate attention to the landlord’s distress is one such example,” the statement said.

“Tenants have been provided with substantial financial support from the government as well as mandated rent reductions at the expense of property owners. This support is set to continue for more than three months to the end of this year.

“While residential property owners had steeled themselves for the six-month moratorium with compassion, empathy and a good dose of trepidation, this extension has been a ‘kick in the guts’ for them and their goodwill is being sorely tested. Of equal concern to the REIV is the disproportionate burden that is being asked of commercial property owners and their agents.”

The REIV statement added that the extension of the commercial tenancy relief scheme is likely to see a large number of small and medium-sized property owners “financially ruined”. 

“Many of these are self-funded retirees who have seen their ability to support themselves considerably diminished. Many tenants will not be required to repay waived rents and many more are unlikely to have the capacity to repay any deferred rents in the near term, or if ever,” the REIV said.

“The REIV does not dispute that many tenants are doing it hard, and we know this because our members serve both property owners and tenants. What concerns the REIV is the lack of due process, oversight and enforcement to ensure that no one takes undue advantage of the situation.

“There is significant evidence of some tenants taking advantage of these circumstances, rendering property owners powerless to fight against the imbalance. Much has been made of the perceived imbalance in the rental market by tenant support groups who take a one-sided view of the market, while property managers see both sides of the relationship.”

Are tenants taking advantage?

The REIV firmly holds the position that tenants are the key focus point in any decision-making relating to the state’s property market.

“A tenant advocacy group recently took the unusual step of making a broad-based complaint to the ACCC against property managers on the sole ‘say so’ of tenants responding to a survey. In doing so, they inexplicably bypassed the real estate profession’s regulator, Consumer Affairs Victoria (CAV), in a grandstand play to have the moratorium extended beyond the initial six-month period,” the REIV said.

“The legislation is now unfairly and squarely biased against those property owners who have worked hard to save and invest to provide for the future of their families. A property owner’s savings and hard work is somehow of lesser perceived value than that of a tenant.

“It is important to note that while there have been over 26,000 rent negotiation agreements lodged with CAV since the scheme began, thousands more agreements have been reached by amicable negotiations with their landlord. Negotiated agreements do not have to be recorded with CAV.

“Overwhelmingly, the supply side is keen to keep good tenants in their property and to negotiate a deal that will see that happen. While some like to paint landlords as evil and unyielding monsters, the truth is that the overwhelming majority of residential landlords are hardworking mum and dad investors trying to shore up their family’s future.”

Bigger picture

Advising on a solution, the REIV reiterated that processes and systems to implement government initiatives in these challenging times must be fair to all.

“The reality is that if a rent negotiation dispute is presented to Victorian Civil and Administrative Tribunal (VCAT), the tenant does not have to provide any evidence that they are suffering COVID-19 financial hardship, the onus is on the property owner or estate agent to prove they are not,” the REIV said.

“In many cases documented by the REIV, tenants have outright refused to communicate with their agent or landlord and have provided no evidence of financial difficulty forcing them into a dispute hearing. It is impossible for the property owner or property manager to prove a negative while blindfolded and with their hands tied.

“Wilful non-payment of rent is a ground for eviction under the COVID-19 laws. However, when VCAT does make an order against a tenant, these orders are often held over until the end of the moratorium period, now extended to next year. In cases where a court order is given, Victoria Police have a variable policy about executing these court orders. This amounts to rent-free living with no accountability. The tribunal already has an unworkable backlog of over 3,500 cases and increasing daily. 

“Land tax concessions for property owners, while welcomed, are insignificant when compared with the financial support available to tenants, particularly in the residential market. The land tax relief on residential land valued at $800,000 is less than $500, while tenants are entitled to $3,000 to help them pay their rent in addition to the rent reduction already offered by the landlord. It is no better for commercial property owners, with pressure mounting daily on the viability of many businesses, even beyond the pandemic.”