Property Investment
04.05.2020

Covid 19 – Eviction Moratorium

Most Landlord’s and tenants will, by now, be aware that both Federal and State Governments have released a range of initiatives to both try and stem the spread of COVID 19, and to support the economy through the inevitable recession that will result from the negative impact on the economy from these initiatives.

This article is information for both Landlords and Tenants regarding the moratorium on evictions announced by the Prime Minister.

Firstly, and of greatest importance, is that this does not meant he rents do not have to be paid. Landlords and Tenants have entered legally binding contracts that will not be annulled by the Prime Ministers statement. Importantly, Real Estate Law is State based. In Victoria rental agreements are governed by the Residential Tenancies Act 1997 (Vic), amongst other legislation pertaining to Real Estate.

What the Prime Ministers statement does mean is that eviction matters relating to financial hardship, which are normally heard in Victoria by VCAT, will not be actioned during the 6-month period that the moratorium is in place, and perhaps longer if it is extended.

What must be clearly understood, by both landlords and tenants, is that rental obligations will still accrue throughout any period in which rent is not paid. So, in plain language, tenants will still be liable to repay any rent that has been missed while the moratorium is in place.

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For tenants that find themselves in financial hardship, it is best to engage with your landlord, or their representative, as soon as possible. Every landlord is aware of the current situation and will be expecting to have discussions with their tenants. Try not to put it off.

For Landlords that have tenants with genuine financial hardship, it is best to engage with them to try and find a way forward. Nobody knows how long this downturn will last, or what the economy will look like when we come out the other side, so having a loyal tenant may be a valuable outcome.

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How do you define genuine financial hardship?

Clearly there is no specific definition for this as it will be different for everyone, but a good starting point will be the rental application form. That form should have statements that support the tenant’s income. From there you can start assessing where they are currently at compared to when they entered into the lease agreement, and hopefully find some common ground.

If it becomes clear that the tenant is in genuine financial hardship, we recommend trying to negotiate a payment plan. Reducing or foregoing rent can potentially lead to legal complications later if the tenant is unable to repay rent owed. It can also impact Landlord insurance, so it is important to check with insurance providers and legal advisors before making any adjustments to repayments.

For both tenants and landlords it is important to understand that the moratorium on evictions only applies to financial  hardship, it does not apply to the other reasons that a landlord may seek to evict a tenant such as damage to the property or using the property for illegal purposes. In those instances, and in accordance with the Residential Tenancies Act 1997, notices to vacate can still be enforced.

For further information you can go to the Australian Government COVID 19 resource, or to the Victorian Government COVID 19 resource.

If you have any further queries, we are always happy to help.

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