Everyone Matters in Real Estate

30 April 2020

Have the Berejiklian Government’s COVID-19 protections for residential tenants considered you?

As the owner of a residential investment property in New South Wales - if you are not already aware of the Government’s proposed COVID-19 protections for residential tenants and landlords, the Real Estate Institute of New South Wales (REINSW) wants to ensure that you do understand them.

As the peak body for the property services industry in New South Wales, we recognise and support the need for tenant protection during COVID-19, however, we are fundamentally opposed to some of the measures. You should be too!

The Berejiklian Government has decided that the cost of the support to be provided to the Tenant, will be paid for by you, the Landlord – plain and simple. You should at a minimum be aware of the following:

• You cannot evict a Tenant impacted by COVID-19 (“impacted tenant”) for non-payment of rent. An impacted tenant is a Tenant who is a member of a household impacted by the COVID-19 pandemic where one or more rent-paying members of the household has lost their job, had their hours of employment or income reduced or had to stop or materially reduce their work hours because of illness with COVID-19, AND the weekly household income has reduced by at least 25%.
  
  
• Verifying that your Tenant is an impacted tenant is problematic. Seeking evidence from your Tenant to verify that they satisfy the criteria of an impacted tenant is seen by some as an unreasonable request and does not appear to be negotiating in good faith as is required.
  
  
• Negotiating in good faith and landlord insurance. You are required to negotiate in good faith. That negotiation may result in you voluntarily reducing the rent. If you proceed with that negotiated outcome, then do so in the knowledge that your landlord insurance will not cover you for that loss of rent.
  
  
• Your Tenant may have substantial resources. The test of an impacted tenant does not take into account any other liquid resource available to your Tenant.
  
  
• Outgoings and repairs. Despite receiving reduced or no rent, you will still need to pay all outgoings and bear the cost of any repairs.
  
  
• The Government’s announcements. The public narrative coming from Government has exclusively focused on the plight of the Tenant. Many tenants only heard “you can’t be evicted”. This has led many tenants who are not COVID-19 affected ceasing to pay their rent – “rent strike”. Government has taken no action to address this issue. Consequently, you may have a Tenant who is not COVID-19 affected and is refusing to pay their rent.
  
  
• The Landlord’s financial difficulties. Transferring the difficult financial circumstances from the Tenant to the Landlord is considered by the Government to be acceptable. There is no consideration given to the Landlord’s circumstances – is the Landlord similarly affected by COVID-19, for example, has the Landlord also lost their job?
  
  
• Government assistance. The Berejiklian Government has provided $2,500,000 to the New South Wales Tenants’ Union to enable it to support tenants during these difficult times. No similar funding has been provided to support landlords.

Now that you understand how the Government’s proposed COVID-19 protections favour tenants at the expense of landlords, REINSW needs your urgent help before Parliament sits on Tuesday, 12 May 2020.

For our voices to be heard, complete your details in the template letters we’ve provided to Premier Berejiklian and your local State member of parliament and press SEND (CLICK HERE TO SEND LETTERS). It’s that simple.

Together we can make a difference and achieve a more balanced outcome for landlords.

Tim McKibbin
Chief Executive Officer
Real Estate Institute of New South Wales
________

You can download this letter here

Feel free to amend it to include your own personal experience.

Subject line: 

Urgent Review of Special COVID-19 Residential Tenancies Amendment (Covid-19) Regulation 2020 (NSW) 

Message:

Dear Premier,

As one of New South Wales’ residential investment property owners, I write to express my concerns with respect of your Government’s Residential Tenancies Amendment (COVID-19) Regulation 2020 (NSW) (“Regulation”). In the interest of striking an equitable balance between a Landlord and Tenant, I ask you to reconsider aspects of the Regulation. I wish to make clear that I recognise and support the need for Tenants to be assisted during these difficult times. However, I do not support, and consider it grossly unfair, that the burden of that support falls solely on Landlords, like myself. 

I am calling on your Government to review and amend the Regulation to account for the following matters:

• An obligation imposed on the Tenant to exhaust all avenues of Government assistance prior to seeking a rent reduction.

• Amend the definition of “impacted tenant” to include an additional requirement that the Tenant does not have access to unencumbered liquid funds, in all the circumstances, sufficient to pay the rent. It is unjust that a Tenant with enough funds to pay rent is excused from doing so because they have lost their job.

• Introduce a definition of an “impacted landlord” and provide protections to that class of Landlord. To do otherwise simply passes the financial stress of the Tenant to the Landlord who is already in financial stress themselves due to the COVID-19 pandemic. 

• Introduce clear guidelines, setting out what documents the Tenant must provide to the Landlord as part of the application for a rental reduction. 

• Introduce a requirement for Tenants to provide evidence of attempts to mitigate the Landlord’s loss caused by a rental reduction. 

• Introduce a standard requirement for Tenants to substantiate a rent reduction request to allow landlords to make a properly informed and fair decision.

• Introduce a requirement and make it clear that a Tenant must continue to satisfy the criteria of an “impacted tenant” not just at the beginning when they request a rental reduction, as appears to be the popular interpretation. 

I am also entitled to be supported and protected during the COVID-19 pandemic. Your Government’s Tenant protections completely ignore my rights, take away my ability to derive critical income and take away control over an asset I have worked hard to acquire. I want to be viewed as an “investor”. l note that people who have invested in the equities market are not being required to support sectors of the community adversely impacted by Covid-19. Is it your Government’s intention for me to regret my investment choice and to send a message to potential investors contemplating purchasing residential rental property?

The public narrative of your Government and that of the Federal Government has made it clear that Tenants cannot be evicted. As you know, that is not correct and the protection only applies in certain circumstances where impacted tenants are unable to pay rent. I recommend you make a very clear public statement to inform the market. This will address the confusion and alleviate a lot of unnecessary disputes. 

I respectively request your Government to consider the matters set out above and amend the Regulation accordingly.
Your sincerely
<insert your name here>