RESIDENTIAL PROPERTY MANAGEMENT
A tenant has advised that they cannot pay their rent. What should I do next?
What if the tenant fails to pay rent and is impacted by COVID19?
If the tenant is in rental arrears and meets the criteria of an “impacted tenant” under the Residential Tenancies Act 2010 (NSW), they are covered by the protections afforded to tenants during the moratorium period which ends at the end of 26 March 2021. During the moratorium period, landlords can only serve a termination notice on the impacted tenant or apply for a termination order in relation to rental arrears if:
- the landlord has participated, in good faith, in a formal rent negotiation process (facilitated by NSW Fair Trading); and
- it is fair and reasonable in the circumstances of the case.
If the tenant is an impacted tenant, then the landlord should enter into good faith negotiations with the tenant regarding rent as soon as practicable in order to reach a resolution.
There is no legislative requirement for landlords to waive or defer any rent or accrued arrears, however, all parties have a duty to enter into negotiations in good faith.
It is recommended that landlords rely on their own enquiries with their insurers in relation to any impact an agreement reached in these circumstances might have on any potential future claims for rent default or loss of rent.
What if the tenant fails to pay rent and is NOT impacted by COVID-19?
If a tenant is not COVID-19 impacted and is not engaging with the landlord/agent then the landlord/agent can issue a termination notice or apply to NCAT for an order, as per the usual process. We recommend that you use REINSW’s template termination notices available on REI Forms Live, which are compliant with the legislation.
For clarity, the landlord/agent does not need to go through NSW Fair Trading’s dispute resolution service where the tenant is not an impacted tenant (that is, where the tenant is a member of a household that is not impacted by the COVID19 pandemic).
What if the COVID-19 impacted tenant refuses to engage with the landlord/agent?
The landlord should attempt to engage the tenant using NSW Fair Trading’s dispute resolution process.
What if a tenant is not engaging with the landlord/agent making it difficult for the landlord/agent to determine whether the tenant is an impacted tenant (regardless of whether or not they were in arrears before the pandemic)?
In this particular situation, the landlord/agent would be able to issue a termination notice or apply to NCAT for a termination order. We recommend that you use REINSW’s template termination notices available on REI Forms Live, which are compliant with the legislation.
REINSW has developed a template letter for use in this situation which can be used prior to a tenant falling into 14 days in arrears. Please see here
What are some strategies to use when negotiating rent deferrals, waivers or reductions with tenants and landlords?
Perhaps a good place to start is by asking the tenant to put forward a suggestion or proposal of what they can pay, including dates on which payments can be made. Ask the landlord to do the same but in reverse - what they could receive at a minimum - and then try to negotiate a successful outcome between both parties. This negotiation suggestion is not going to be possible in some cases and can only be successful if both parties negotiate reasonably and in good faith. Often there is no easy answer to this question as there are no hard and fast rules in this process. Accordingly, REINSW anticipates that many landlords and tenants will be reliant upon NSW Fair Trading’s dispute resolution service, formal mediation or NCAT decisions for resolution.
I have a tenant stating that they are a member of a household impacted by the COVID-19 pandemic, however, they are refusing to provide proof to support this claim. What do I do?
You should send them a letter requesting the supporting documents using REINSW’s template letter addressed to the tenant who has not provided supporting documents. This template can be found on REINSW’s website here.
Where a tenant is unwilling to assist in good faith negotiations, formal rent negotiations through NSW Fair Trading’s dispute resolution service should be sought.
Whilst a residential tenant is not legally obliged to provide evidence supporting their claim, failure by any party involved in this process to act reasonably, honestly, transparently and in good faith could hinder the chances of a successful resolution.
I have a tenant who has stopped paying rent or is paying a reduced amount of rent without the landlord’s consent. What do I do?
You should send the tenant a letter reminding them that there has been no change to their obligation to pay rent under the lease and that they are still required to pay the full amount of rent in accordance with the terms of the lease until such time as the parties otherwise agree.
You should use REINSW’s template letter that has been prepared for this scenario, which can be found on REINSW’s website here
What do we do if a landlord and a COVID-19 impacted tenant are unable to agree on rent payments?
Where an agreement cannot be reached through your own negotiations, in an attempt to seek resolution, both parties must engage in a formal rent negotiation process, facilitated by NSW Fair Trading via its dispute resolution service. An application to use NSW Fair Trading’s dispute resolution service can be made here.
Can I serve a termination notice on an impacted tenant in arrears or apply to NCAT for a termination order?
If a COVID–19 impacted tenant falls 14 days into arrears and the parties have participated, in good faith, in a formal rent negotiation process (facilitated by NSW Fair Trading), if it is fair and reasonable to do so in the circumstances of the case, the landlord may serve on the tenant a termination notice for non-payment of rent (providing 14 days’ notice to vacate). We recommend that you use REINSW’s template termination notices available on REI Forms Live , which are compliant with the legislation and temporary amendments.
Once a termination notice for non-payment of rent has been served, an application to NCAT for a termination order may be made on behalf of the landlord following the usual process. NCAT will issue orders against a COVID-19 impacted tenant for vacant possession, where it is fair and reasonable to do so in the circumstances. The usual process for a warrant for possession will apply.
If the tenant is not a COVID-19 impacted tenant, the usual process of issuing a termination notice for non-payment of rent should be followed whereby the tenant is given 14 days’ notice to vacate the premises. You can make an application to NCAT for vacant possession on behalf of the landlord prior to the termination notice expiring. However, please note that you should provide as much supporting evidence as possible to establish that the tenant is not a COVID-19 impacted tenant.
I’ve heard that termination notice periods during the moratorium period have been extended. What are the new notice periods?
The termination dates for particular termination notices given during the moratorium period is governed by the Residential Tenancies Regulation 2019 (NSW). The following termination notice periods apply to the following types of termination notices during the moratorium period (with the expiration of the moratorium period at the end of 26 March 2021):
- Breach of agreement (other than non-payment of rent) under section 87 now requires a 90-day notice period (as opposed to 14 days)
- Ending a residential tenancy agreement at the end of a fixed term tenancy under section 84 now requires a 90-day notice period (as opposed to 30 days)
We recommend that you use REINSW’s template termination notices available on REI Forms Live , which are compliant with the legislation.
Do the new termination notice periods apply to all types of terminations?
No. A termination notice can be served on a tenant in the usual way in the following circumstances:
- the tenant is in breach of the residential tenancy agreement due to nonpayment of rent/charges not due to the tenant being impacted by COVID19 (section 88);
- the landlord is suffering hardship (section 93);
- the tenant has caused serious damage to the property or injury to the landlord, the landlord’s agent or neighbour (section 90);
- the tenant uses the premises for illegal purposes (section 91);
- the tenant has threatened, abused, intimidated or harassed the landlord, the landlord’s agent or another person (section 92);
- the landlord has entered into a contract for sale of the premises under which vacant possession is required (section 86); and
- the tenant has not complied with a rectification order (section 92A).
REINSW has prepared template termination notices that are applicable to some of the above circumstances and are available on REI Forms Live .
Do the restrictions on applying to NCAT for a termination order apply to all types of terminations?
No. An application to NCAT for a termination order can still occur in the usual way in the following circumstances:
- a COVID-19 impacted tenant is in breach of the residential tenancy agreement due to non-payment of rent/charges and the landlord and tenant have met the following relevant prerequisites: the landlord has first participated in good faith in a rent negotiation process facilitated by NSW Fair Trading and it's fair and reasonable in the circumstances for the tenancy to be terminated (section 41C(2));
- the tenant is in breach of the residential tenancy agreement due to non-payment of rent/charges not due to the tenant being impacted by COVID-19 (section 88);
- the landlord is suffering hardship (section 93);
- the tenant has caused serious damage to the property or injury to the landlord, the landlord’s agent or neighbour (section 90);
- the tenant uses the premises for illegal purposes (section 91);
- the tenant has threatened, abused, intimidated or harassed the landlord, the landlord’s agent or another person (section 92);
- the landlord has entered into a contract for sale of the premises under which vacant possession is required (section 86); and
- the tenant has not complied with a rectification order (section 92A).
Can I still undertake my routine/periodic inspections during the COVID-19 pandemic?
Whilst there is nothing legally preventing an agent from undertaking physical routine or periodic inspections on behalf of a landlord during this time, before doing so, each agency should review and adapt their own risk management strategy regarding COVID-19 in consultation with their workers compensation insurer and, where applicable, the Real Estate Employers Federation (REEF).
Where a decision is made to undertake these inspections utilising virtual software/technology, it is recommended that agents first contact their professional indemnity and public liability insurers to make enquiries regarding inspections being conducted in a virtual environment.
Tenants are not allowing access for repairs, maintenance and open for inspections even though they have been given appropriate notice. What should we do?
There has been no change to the notice periods required before entering a premises during a residential tenancy agreement without the tenant’s consent section 55.
Ideally, all repairs should take place during this pandemic period, however, we understand that some trades and services are only attending to urgent and essential repairs. It is imperative for maintenance to continue during the COVID19 pandemic period if it is mandatory smoke alarm maintenance, urgent repairs or repairs where a person’s health and/or safety could be at risk.
If entry for the purpose of checking smoke alarms is not permitted by a tenant, clear written notes must be kept on file to demonstrate the agent’s attempts to comply and the circumstances of any refusal of access.
Given the current climate, showing a vacant property to prospective tenants or purchasers is the ideal, however, it is not always possible.
Where access is denied by a tenant, the agent should not enter the premises but, rather, should make an application to NCAT. NCAT has the power to make orders for tenants to provide access upon application. It is not recommended for agents to enter a premises where the tenant has denied access. There have been instances in the past where an agent has accessed a property without the tenant’s consent (after providing the appropriate notice) and the agent was subsequently accused of serious theft and a fraudulent claim successfully made against the agent’s insurance.
Do bonuses and commissions form part of household income for the purposes of determining whether a tenant is a COVID-19 impacted tenant?
NSW Fair Trading has confirmed that bonuses and commissions would generally comprise household income, which is income received into the tenant’s bank account after tax. Based on guidance from the Australian Taxation Office website , commissions and bonuses constitutes employment income.
My landlord has instructed me to issue a rent increase notice to a tenant. I thought landlords can’t increase rent during the pandemic?
There are no additional restrictions on rent increases for residential tenancy matters during the COVID-19 pandemic. However, landlords must abide by the legislative reforms which took effect on 23 March 2020 regarding rent increases, specifically sections 41 and 42 in the Residential Tenancies Act 2010 (NSW).
When will the COVID–19 moratorium end?
The moratorium period for residential properties ends at the end of 26 March 2021, unless extended further by the Government.
GENERAL AGENCY PRACTICE
Agencies can now register as a COVID-19 safe business. Complete this form to register.
General information regarding open homes (sales and rentals) and auctions (including sale yards) can be found here.
SALES
What should agents be doing at open homes in view of COVID-19?
REINSW advises all agents in New South Wales to ensure compliance with government regulations. This includes:
- Ensure there is 4sqm space per person. (Social distancing rules must be adhered to.)
- All entrants to be provided with hand sanitiser upon entry.
- Write down the contact details of everyone inspecting the property. This is for use in alerting those visitors in case of a COVID-19 outbreak (these records are subject to privacy laws and will be treated in accordance with those obligations).
REINSW has prepared a Best Practice guide for open homes. Best practice for holding an open home:
- Ensure you have a sign up outside your open home which states the following information: You are here to view the property but as part of social distancing requirements please do not touch anything. If you feel unwell do not come into this property. You are invited in if you are a genuine prospective buyer/lessee
- We recommend that you download the government’s COVIDSafe app.
- Make sure all cupboards/doors are open, so that visitors to the property need not touch anything.
A tenant is not allowing access for open inspections even though they have been given appropriate notice. What should we do?
There has been no change to the sale of residential premises (section 53) under the Residential Tenancies Act 2010 (NSW). A landlord or agent must make all reasonable efforts to agree with the tenants as to the days and times for inspections for the purposes of showing prospective purchasers. Whilst a tenant cannot unreasonably refuse access, we understand that, during the COVID-19 pandemic, tenants may resist providing access.
Where a landlord and tenant are unable to reach agreement, a landlord has the right to make an application to NCAT under section 60 of the Residential Tenancies Act 2010 (NSW), being landlords’ remedies relating to access to premises.
We have unconditionally exchanged a contract for sale for a tenanted property and the contract calls for vacant possession. What notice period can the landlord give?
Again, there has been no change in the notice periods surrounding the sale of residential premises under section 86 of the Residential Tenancies Act 2010 (NSW).
Provided the tenants are on a periodic lease (that is, they are holding over following the expiry of a fixed term agreement), a tenant can be given a 30-day termination notice after an unconditional exchange of contracts (note: there is no specific limit on when the notice can be issued).
Where a tenant is under a fixed term tenancy agreement, a property must be sold subject to existing tenancy unless the tenant invokes their right to end the agreement early and without penalty in accordance with section 100.
REINSW has prepared template termination notices that are applicable to the above circumstances and are available on REI Forms Live.
When can letterbox deliveries recommence?
Letter box dropping is now allowed as it is considered a job and droppers are encouraged to go about their work as they would have previously.
AUCTIONS
We want to commence conducting auctions, both on site and in rooms, as soon as possible. What are the steps we need to follow?
REINSW advises all agents in New South Wales to ensure compliance with government regulations. This includes:
- Ensure there is 4sqm space per person (social distancing rules must be adhered to).
- All entrants to be provided with hand sanitiser upon entry.
- Write down the contact details of everyone inspecting the property. This is for use in alerting those visitors in case of a COVID-19 outbreak. (These records are subject to privacy laws and will be treated in accordance with those obligations).
- In-room auctions can take place providing the 4sqm rule is maintained.
- Auctions can take place inside or outside the property
REINSW has prepared a Best Practice guide for auctions. Best practice for conducting auctions:
- Only registered bidders and their immediate family should be permitted into the auction area.
- Wherever possible the auction should be conducted outside and in the backyard of the property.
- If the auction is conducted in the front yard, then the auction area should be clearly marked and cordoned off from the general public (only registered bidders and immediate family members may be admitted).
- Outside auctions will assist with ensuring the 4sqm distancing requirements.
- The agent/auctioneer should make the bidders aware of their social distancing obligations and that their participation at the auction is contingent on compliance with those obligations.
- Every person attending the auction should be asked to confirm that they are not unwell and not in breach of any quarantine/self-isolation obligations.
- Anyone exhibiting symptoms consistent with COVID-19 is to be refused entry.
- Signage recommending that attendees at the auction activate the COVIDSafe app.
COMMERCIAL & RETAIL PROPERTY MANAGEMENT
Matters relating to commercial and retail tenancies are covered by the Mandatory Code of Conduct and the Retail and Other Commercial Leases (COVID-19) Regulation (No 2) 2020 (NSW) available here.
A tenant has advised that they cannot pay their rent. What should I do next?
The first step is to ask the tenant to complete REINSW’s Rent Relief Request Form. That way, the landlord/agent can determine whether or not the tenant is an “impacted lessee” as defined in the Retail and Other Commercial Leases (COVID-19) Regulation (No 2) 2020 (NSW).
I have a tenant stating that they are a member of a household impacted by the COVID-19 pandemic, however, they are refusing to provide proof to support this claim. What do I do?
You should send them a letter requesting the supporting documents using REINSW’s template letter addressed to the tenant who has not provided supporting documents. This template can be found on REINSW’s website here (for commercial tenants) .
A party to an impacted lease must, if requested by the other party to renegotiate the rent payable, commence good faith negotiations within 14 days of receiving that request. An impacted lessee must give the lessor a statement to the effect that the lessee is an impacted lessee and evidence that the lessee is an impacted lessee.
I have a tenant who has stopped paying rent or is paying a reduced amount of rent without the landlord’s consent. What do I do?
You should send the tenant a letter reminding them that there has been no change to their obligation to pay rent under the lease and that they are still required to pay the full amount of rent in accordance with the terms of the lease until such time as the parties otherwise agree.
You should use REINSW’s template letter that has been prepared for this scenario, which can be found on REINSW’s website here (for commercial tenants) .
When will the COVID–19 moratorium end?
The moratorium period for commercial and retail properties ends at the end of 31 December 2020, unless extended further by the Government.
STRATA
We suspect a resident of a unit complex has COVID-19, what action do we need to take?
Whilst there is mandatory reporting to government health authorities regarding COVID-19, it is not mandatory for a resident within a strata complex to advise an owners corporation or adjoining neighbours if they are COVID-19 affected.
An owners corporation must respect the privacy of a person who discloses their condition by not disclosing their identity to anyone.
Irrespective of whether an occupant of a complex has COVID-19, body corporates should increase cleaning and undertake preventative hygiene measures. Where body corporates are aware of a confirmed case of COVID-19 within a strata building, tradespeople and contractors on site should be advised beforehand so that appropriate PPE measures can be applied.
To read more about strata guidelines during COVID-19, please visit NSW Fair Trading here
What are some of the changes to legislation as part of the new strata and community schemes emergency measures?
Strata and community schemes can now meet and vote electronically, use an electronic alternative to affixing the common seal and are permitted additional time to hold their first AGM. For more information, please refer to NSW Fair Trading’s page entitled “ Strata and community schemes COVID-19 guidance ”.
We are unable to hold our AGM as scheduled due to COVID-19, what options do we have?
Strata schemes have 6 months in which to hold their first AGM.
Where holding an AGM in person is not possible, all strata schemes can now meet and vote electronically (including where a previous resolution allowing electronic voting has not been passed). There are minimum requirements to ensure fairness and availability to owners. Please refer to NSW Fair Trading’s page entitled “Strata and community schemes COVID-19 guidance” for further information.