With the Federal Government announcing a 6 month moratorium on evictions, landlords and tenants have been advised to work through their issues together. In these uncertain times it could pay to keep the communication lines open, and to know what your options are.
As part of the Federal Government’s ‘hibernation approach’, both commercial and residential landlords will be banned from evicting tenants who can’t meet their rent commitments because of financial stress caused by the coronavirus economic downturn.
The embargo on evictions will last for six months.
Clearly many tenants are worried they won’t be able to pay their rent, but on the flip side, landlords, many of whom are ordinary mum and dad investors are concerned they won’t be able to keep up their mortgage payments. On top of that, some of these landlords have also lost their jobs, creating a double whammy for them.
So whilst tenants have become somewhat of a ‘protected species’ for the next six months, Landlords may well be asking the question, ‘what if my tenant doesn’t pay rent for six months and then at then end of the period they leave and don’t catch up the rent, but I will still have to pay the mortgage?’
These concerns are very valid and the longer this crisis lasts and the more people become unemployed, or have their income compromised in some way, the more widespread the problem will become.
What should Tenants do?
If you are a residential property tenant and you have either lost your job, been stood down or had a reduction in hours which has impacted your income and therefore ability to meet your rent obligations then call your Landlord or Property Manager immediately to let them know. You can then have a discussion about where to from here. Don’t just stop paying rent. Just because you cannot be evicted doesn’t take away the obligation to pay rent.
What should Landlords do?
If you’re lucky enough to still have a tenant that is paying rent that’s great but you should still be thinking about your contingency plan if you do get that fateful call from your tenant. In other words, be prepared.
If you have a property manager who manages the property for you, be guided by them. Don’t blindly offer to waive rent as there may be unintended consequences down the track. Your property manager should be an expert in dealing with these circumstances and the right process to follow.
If you have Landlord’s Insurance, ensure you call them and discuss under what circumstances, if any, you would be able to make a claim on the policy and any process you need to follow to ensure eligibility.
If you have a loan on your investment property then call your Mortgage Broker on 8300 8300 to discuss the options available if you no longer had the rental income to assist meeting the mortgage repayments.
Prior knowledge and preparation is the key to ensuring you get through this in the best way possible and with the least amount of financial pain.
*The information provided in this article is general in nature and does not take into account your personal circumstances. Since everyone's personal situation is different, this article should not be taken as advice. We recommend you seek individual advice with a mortgage broker.