Important Latest updates for landlords and tenants

Victorian tenants will “breathe a sigh of collective relief” now the state’s moratorium on evictions and rent hikes for those struggling through COVID-19 has been extended until the end of the year.

Treasurer Tim Pallas announced on Thursday that the bans would continue to apply for both residential and commercial tenants until December 31, well beyond the initial September 29 expiry date, with exceptions only “in rare and specific circumstances”.

Mr Pallas said further land tax relief and grant funding would be made available for residential and commercial landlords who supported struggling tenants amid Victoria’s second wave of COVID-19.

Landlords who provided “outright rent waivers” of at least 50 per cent for at least three months would now be eligible for an additional 25 per cent land tax relief, on top of the 25 per cent already on offer, he said.

Eligible residential tenants and landlords would be supported with up to $3000 in rental payments as part of the Rental Relief Grant program. And a $60m fund would also be established to gift eligible small commercial landlords up to $3000 per tenancy.

“Nobody should be worried about losing a roof over their head right now, particularly given the circumstances around social distancing,” Mr Pallas said.

“This is about (ensuring) those who depend upon tenancy arrangements for their shelter, their homes, are provided with adequate safeguards.

“It’s also about making sure we … provide support and assistance to landlords who do the right thing by their tenants.”

Mr Pallas said the government was also encouraging banks to “continue to do the right

thing by their customers” and investing about $600,000 to support tenancy advocacy groups like the Victorian Council of Social Service, and Tenants Victoria.

Tenants Victoria chief executive Jennifer Beveridge said the state’s renters could now “breathe a sigh of collective relief” that they would continue to be protected from evictions if they fell behind on rent.

“If there is need for a further extension, we are confident the government will respond,” Ms Beveridge said.

The peak body for renters previously called for the moratorium to be extended to the end of March.

The government first confirmed the moratorium in April. At the same time, it unveiled a $500m package to support both tenants and landlords, which also included $420m of land tax relief for landlords who discounted rents for tenants in pandemic-related hardship, plus $80m in assistance for tenants who remained in rental stress even after discounting.

Mr Pallas said on Thursday he expected to see land tax relief claims “in excess of $100m”.

He added almost 26,000 agreements for rent reductions had been registered with Consumer Affairs Victoria in the past four months.

The Victorian Small Business Commission had also assisted with about 8000 rent-related inquiries.

Mr Pallas also clarified commercial landlords would now be required to provide rent relief “in proportion with falls in turnover”.

“If you’re identifying a downturn in your capacity, your turnover, then you should have an expectation that is similarly reflected in terms of the rent relief that you get,” he said.

Real Estate Institute of Victoria president Leah Calnan said a $1000 increase in the rent relief grant to $3000 was welcome news for landlords.

Further land tax concessions for impacted landlords would also help many who had been struggling amid rent reduction agreement.

“We’re still seeking clarity from government about how this change will affect pending (residential tenancy) cases in (the Victorian Civil and Administrative Tribunal), including where orders have already been issued in VCAT,” Ms Calnan said.

“We’ve also strongly advocated for the Residential Tenancies Act amendments to be postponed to July 2021 as we still haven’t seen any regulation around them.”

The 130 rent reforms have been delayed until January 1.

Premier Daniel Andrews said the protections were “important” for “both families and individuals who are renting, but also businesses who’ve got commercial arrangements and who, through no fault of their own, have got turnover that is a fraction of what it was this time last year”.

After the moratorium was initially announced, the government clarified evictions were only permitted if a tenant is engaging in threatening behaviour or maliciously damaging a property, or if a landlord is selling the home or they or their family need to move into it.

The Victorian Government is extending eviction moratorium laws to provide greater certainty for both tenants and landlords.

Rental increases are also banned until the end of the year.

Victoria’s ban on rental hikes and evictions which had previously been set to expire on 29 September will be extended until 31 December.

Extension of these laws will ensure that Victorian renters facing hardship due to the coronavirus (COVID-19) pandemic will not be evicted from their homes (with limited exceptions) or have their rent increased until 31 December 2020.

In addition to the eviction moratorium extension, further support being introduced for residential and commercial tenants and landlords includes:

changes to the land tax relief scheme and an increase of land tax discount from the current 25 per cent to 50 per cent for residential landlords who provide a 50 per cent rent reduction to eligible tenants
extension of the Rent Relief Grant program to 31 December 2020, increasing the maximum grant amount to $3,000 for new applications, and allowing previous recipients to receive up to an additional $1,000
extension of the Residential Tenancies Dispute Resolution Scheme until 31 December 2020.

Treasurer Tim Pallas explained:

“Landlords that provide outright rent waivers of at least 50 per cent of rent payable for at least three months will be eligible for an additional 25 per cent land tax relief,”

“A $60 million fund additionally will be established for eligible small commercial landlords, and that will provide up to $3,000 per tenancy.”

He also called on the banks to “do the right thing”.

“To get through this together, all of us – tenants, landlords, businesses, governments, banks – we need to work together.

And certainly these arrangements – which seek to strike that right balance – are aimed at ensuring that where the right thing is done by a landlord for a tenant, where they comply with the eligible criteria, then they too can expect that the state will provide them with relief as well.”

Pallas noted that in the last four months, around 26,000 agreements for reduced rent have been registered with Consumer Affairs Victoria, while the Victorian Small Business Commissions also facilitated around 8,000 rent-related inquiries.

“Nobody should be worried about losing a roof over their head right now – particularly given the circumstances around social distancing but also, the associated economic consequences of the pandemic event that the entire world is confronting,” Pallas said.

“So we need to provide certainty to people who lose their homes or their businesses, and we need to help tenants and landlords find some common ground.”

New rules for commercial landlords

With Victoria in Stage 4 lockdown and many businesses closed commercial landlords will need to offer rent relief in line with business’ turnover.

Previously, there were no defined rules and that relationship between rent reductions and falls in turnover was just something the government hoped landlords would do.

“But we will now make it a very clear and expressed intention that, if you’re identifying a downturn in your capacity, your turnover, then you should have an expectation that that is similarly reflected in terms of the rent relief that you get,” Pallas said.

Here’s what’s happened so far

In the past four months, close to 26,000 agreements for reduced rent have been registered with Consumer Affairs Victoria (CAV), with advice and dispute resolution services accessed more than 80,000 times.

Of these contacts, more than 90 per cent have found solutions through CAV’s ‘front door’ service, including more than 8,400 cases resolved through its Residential Tenancies Dispute Resolution Scheme.

These services will continue to remain in place, assisting more residential tenants and landlords who might be struggling to reach an agreement over rent reductions.

The Victorian Small Business Commission (VSBC) offers a similar service for commercial tenancies and has fielded more than 7,900 rent-related enquiries from small business owners and landlords.

Of the cases reaching mediation, more than 90 per cent have resulted in tenants and landlords reaching common ground.

Samantha Landy

20 Aug 2020

Raine & Horne Essendon Blog