Finance Property ‘Ticking time bomb’: Future of rent moratoriums under a cloud after coronavirus payment changes Updated:

‘Ticking time bomb’: Future of rent moratoriums under a cloud after coronavirus payment changes

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Renters who held on to their accommodation under a nationwide ban on evictions face an uncertain future when coronavirus stimulus payments are scaled back from September.

The Morrison government this week announced reductions to both JobSeeker and JobKeeper, which will kick in around the time state-based protections for renters in financial hardship expire.

While some tenants successfully negotiated rental reductions with their landlord under amendments made to state tenancy laws at the height of the pandemic, many were less fortunate.

Some deferred their payments entirely. Others thought they had their rental payments reduced – only to find their debt is still accruing.

With roughly two months left until the eviction ban lifts, there’s concern thousands will not be able to service the mountains of debt.

Tenants ‘caught off-guard’ by landlords

Shavon*, who lives with her 11-year-old daughter in a two-bedroom unit, is one tenant whose story may be common in September.

The Sydney-based woman, who manages a production company and an interior design business, lost all her income once New South Wales locked down in March.

Shavon tried negotiating a reduction while applying for JobSeeker and, eventually, she started paying discounted rent every week – covered entirely by her welfare payments.

However, even as she dipped into her savings to purchase food and other essentials, her agent demanded in early July that roughly $2000 in rental debt be paid as a lump sum.

Then the termination letters arrived.

“It caught me completely off guard,” she told The New Daily. 

“Before COVID, I paid my rent two weeks forward, I fixed everything in the apartment – we were the perfect tenants.

“The real estate agent hadn’t negotiated anything with me or made any attempt to have a discussion in good faith.”

Despite her willingness to compromise, she’s bracing for the prospect of relocating after the agent decided to take her case to the NSW Civil Administrations Tribunal (NCAT).

Under the state’s tenancy legislation, the 60-day freeze on landlords filing for evictions with NCAT ended on June 14, with the tribunal recording more than a 40 per cent jump in applications by the end of that month.

JobSeeker changes ‘diabolical’

Guardian Australia investigation found limited data on the number of tenants who entered arrears during the pandemic.

The Australia Institute’s modelling found 370,000 Australians would dip below the poverty line once the revised JobSeeker is introduced in September.

The progressive think tank also calculated roughly 242,000 mortgagees and 246,000 tenants would enter poverty if the $550 coronavirus supplement were removed entirely.

Better Renting executive director Joel Dignam told The New Daily tenants’ “stress and anxiety” is being fuelled by uncertainty over what will happen once moratoriums are lifted.

With unemployment soaring to 7.4 per cent in the pandemic – and young people disproportionately affected by job cuts – he said governments must announce new measures to stop a devastating flood of evictions.

“The confluence of JobSeeker going down and potentially eviction bans being lifted is going to be diabolical,” Mr Dignam said.

“Ideally, JobSeeker needs to be kept at a rate that keeps people out of poverty, extending eviction bans, and ensuring tenants can get binding arbitration so rents can be set at an affordable level once the moratorium is over.”

CoreLogic Australia head of research Eliza Owen previously warned a wave of distressed sales spurred by property owners’ inability to meet mortgage repayments could weigh down property prices.

Already, rental vacancy rates in Sydney and Brisbane’s CBDs have more than doubled in the pandemic, according to SQM analysis. 

Property Owners’ Association of NSW president John Gilmovich said he’s concerned about the “ticking time bomb” that’s been created by a potential second exodus of renters from the market.

“If tenants start bailing out of their leases because they can’t afford them, and there’s already a high number of rental properties available, that’s going to put further downward pressure on rents,” Mr Gilmovich told The New Daily. 

“To prevent more vacancies, governments need to provide support in the form of rental assistance that goes directly to the landlord, with the tenant expected to top off the rest of the weekly rent.”

A spokesperson for Senator Anne Ruston, federal minister for families and social services, refused to confirm if the government would direct states to extend the moratorium beyond six months.

However, she said government would “continue to monitor the situation” and respond as appropriate.

* Shavon asked not to have her surname published