COVID-19 - Client Update 23/4/2020

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COVID-19 - Client Update 23/4/2020

23/4/2020 - Update on DRAFT Guide released on the HUB tonight 

THANK YOU THANK YOU THANK YOU! It worked. All the efforts that Queensland Investors have put into the REIQ's Everybody Matters campaign has made a difference. 
 
As a member of the REIQ we were privy to a closed Webinar today that discussed the draft guide which has been uploaded to The-Hub tonight (you can click here to see the draft guide). The finalised regulation will be available to us soon (hopefully tomorrow). But for now the guide gives us clarity so we can now start managing tenancies affected by COVID-19. 
 
That for me was the most important part of the regulation, how do we determine if a tenancy is COVID-19 impacted or not? Here is how we will do so; 
 
A Threshold Test will be applied. Which is as follows: 
 
To meet the requirements for the six-month moratorium on evictions, a household is impacted if:
  1. A person is suffering excessive hardship due to the COVID-19 emergency if any of the following apply:
    1. one or more tenants or residents are afflicted by COVID-19
    2. they are subject to a public health direction to stay at a place
    3. a public health direction has closed their employment or restricted their employer’s trade or business
    4. they are self-isolating because they or a member of their household or a someone they are a primary carer for is a vulnerable person
    5. they are unable to work because of a travel restriction
    6. they have been prevented from returning to Australia; AND
  2. the person suffers a loss of income of 25% or more, OR
  3. the rent payable is 30% or more person’s income.
To do this, a tenant will be required to supply their Owner/Property Manager with the documentation the same as is required when determining their suitability as tenant's when they first apply. 
If a tenant refuses, or does not respond, or stops paying rent, we can issue a 'Notice to Show Cause' . This encourages the tenant to speak up and if they do not we can issue the appropriate notices. 
 
So what does this look like going forward....
 
What if a tenant is having trouble paying rent?
It is important that if a tenant is having trouble paying rent, that we talk about their options. There may be requests for rent adjustments, if this occurs for your tenant, we will have the options to either negotiate a rent Deferral (where you can claim back the unpaid rent) or a Permanent Rent Waiver where the rent is negotiated for a fixed period. 
 
While I remain hopeful that we don't see a spike in these request, I am also grateful that we now have the option to defer any arrears and claim back at a later stage. The Residential Tenancies Authority will provide a legally binding variation agreement (Form 18d) for us to use and it is recommended that this is done for a short period, and revisited regularly. 

How will rent deferral or rent waiver affect my landlord insurance?
We are told by the REIQ, that provided that a contractual agreement is entered into - a Form 18d with Special Terms - then there is no reason to believe that this will affect your Landlord Protection insurance.

The REIQ is in the process of preparing for us the special terms to use should you need to enter into this form of agreement with a tenant. Please check with your insurance before agreeing to a change to the contract. 
 
Break Lease
There may be situations where a tenant can not meet the Threshold Test of a 75% reduction in income but still are unable to meet their obligations. In those cases, normal break lease conditions will apply. We remain confident that we can rent properties in the current climate and this week have had an increase  in enquiries on our currently available properties. 
 
Can you end a fixed term agreement?
We are happy to hear that you can still end a fixed term agreement IF the tenancy is COVID-19 impacted, on the following conditions:  
  • the property owner is preparing to sell the property and the preparation requires the property to be vacant or they have entered into a contract for sale of the property with vacant possession. 
  • The owner or a member of their immediate family needs to move into the rental property.
    This will make it much easier for a property owner if they need to make this sort of decision to this affect during this period. 
There is more to cover but these are the main points that I wanted to share with you tonight.
 

The HUB has been updated 

In response to COVID-19, we are introducing a range of measures to support the residential rental sector:

    • tenants in financial distress due to the impact of the coronavirus who cannot meet their rent commitments cannot be evicted or listed in a tenancy database for rent arrears.
    • fixed term agreements due to expire during the COVID-19 pandemic will be extended to 30 September 2020 unless the tenant requests a shorter term.
    • cap break lease fees for eligible tenants – household income reduced by at least 75% and savings of less than $5,000.
    • owner obligations for routine repairs and inspections have been relaxed but regulatory obligations to ensure tenant safety in the rental property continue to apply.
    • tenants may refuse physical entry for non-essential reasons, including routine repairs and inspections, particularly if a member of the household is a vulnerable person. However, tenants must agree to virtual inspections if physical inspections are not agreed to.
    • tenants and property owners should work together to reach agreement. If agreement cannot be reached, parties are required to undertake conciliation to resolve disputes which aims to achieve conciliated agreements which form part of the tenancy agreement.

To meet the requirements for the six-month moratorium on evictions, a household is impacted if:

    1. A person is suffering excessive hardship due to the COVID-19 emergency if any of the following apply:
      1. one or more tenants or residents are afflicted by COVID-19
      2. they are subject to a public health direction to stay at a place
      3. a public health direction has closed their employment or restricted their employer’s trade or business
      4. they are self-isolating because they or a member of their household or a someone they are a primary carer for is a vulnerable person
      5. they are unable to work because of a travel restriction
      6. they have been prevented from returning to Australia; AND
    2. the person suffers a loss of income of 25% or more, OR
    3. the rent payable is 30% or more person’s income.