The Federal Government has now placed a six month moratorium on evictions. New measures enacted by the National Cabinet now means that Tenants cannot be evicted from their homes if they have financial hardship because of the economic fallout from the coronavirus crisis.
This is not a decision that would have been taken lightly:
This measure has been put into place to put prevent homelessness during a Global Pandemic. It is part of a Government strategy to protect the health and safety of the community by ensuring that all Australians are able to self- isolate while the rate of Covid 19 infection is brought under control.
At the moment Australia has a lot to be grateful for. Our Covid-19 death rate is much lower than many other Countries. People in Australia are making an effort to help others in their community, and to support local businesses. If we work together to ensure everyone stays afloat, our recovery will be quicker and our losses much smaller.
The NSW Government is currently investigating ways in which they can further support landlords such a reducing or waiving Land Tax. If you feel that your Lender could do more to support Landlords who are waiving or reducing rents to support tenants in financial difficulty, let us know.
Thirteen Important Things to Remember:
- If your investment property is neutral or positively geared – well done you should be fine – don’t panic!
- Be careful in extending your loan arrangements as it can place you in a worse position than you are in because the lenders are NOT LETTING YOU OFF WITH ACCRUING INTEREST. There may be better opportunities than extending a finance arrangement & that is, if you have been a good saver, you could have some savings in your offset account. So, it may be better if you wait & see when the extra funds are close to running out before deferring your repayments. I would recommend that you calculate when the surplus funds are likely to expire & make plans to message me at least a month prior to you becoming short as all sorts of opportunities are on the horizon too.
- Consider refinancing to ease the repayments – Or go to interest only if you are not already doing so and if it is possible. (Call Us –we can help!)
- Make sure you have LANDLORD insurance – before they have an opportunity to change their policies. Most policies will pay you for a period of time for rental default. This is one absolute must in these times of unemployment. Please check your policy before your property manager calls so you know your options if you need help let us know.
- If your tenant is unable to pay rent, and this means you are having difficulty covering costs associated with the property such as rates, contact the Council or the Water Authority and ask for hardship assistance.
- If your tenant is currently employed and still earning an income then they still have the capacity and obligation to pay the rent.
- If your tenant loses their job – then get ready to negotiate their current weekly rent or risk losing them as a tenant and having your property vacant for several months. It is important to remember that your tenant is being placed in this position because Government has placed them in lockdown, or has restricted their access to employment. They will be as anxious as you for things to return to normal.
- Tenants are still obliged to pay their rent, but you should be prepared to negotiate the terms. Some landlord clients, when seeing that the client wants to quit the property anyway have offered substantial discounts & been successful in retaining the client. I have seen, often that the agent doesn’t want to see the rental rate reduced because he may not see the benefits of your strategy.
- On the other hand, Good property managers will negotiate a reduction for a small period of time until the tenant is are re-employed,. However – There are currently concerns being raised about the implications of tenants ending up with debts they will be unable to pay back. It is better to have a reduced rent for a limited time frame rather than massive arrears in six months that might be difficult to recover.
- Modify your expectations in line with the current crisis. Former AirBnb rentals are now flooding the market as long term leases. Government legislation is being shaped by emergency response to this deadly disease. Keeping your tenants, and negotiating a reduced rate may be a short term option that protects you from further losses down the track.
- Remember the government has doubled the weekly unemployment benefit so they may have income to support some rental payments. However – it is also important to remember that not all tenants will have immediate access to these funds, and some will not be eligible for the current programmes on offer. Most of the Government subsidies wont start till May.
- Be creative with other incentives to have your property rented out first or to keep the rent at the same price:
- Offer to pay for the internet/Netflix/TV subscriptions
- Offer to pay for the first quarter electricity/water bill
- Don’t consider selling unless you have to. The worst thing to do in a crisis is to sell up if you don’t need to. With reduced access to open homes and buyers cautious without jobs, you may not get the price you are seeking. There will still be buyers out there and real estate agents have been quick to adopt one on one appointments and create online auctions. Note that real estate prices rose in the major cities during the GFC.
Overall, Remember to be nice and be kind. We are all hurting. No one has asked for this to happen to them.
Any queries at all, call me on 0409076419 or email me