Melbourne’s rental eviction moratorium is likely to be extended until the end of the year following the devastating impact of stage 4 restrictions.
Industry insiders told The New Daily there will be “some form of extension” beyond the legislated end-date of September 29 until at least December 31, and could be tapered down until March in line with government stimulus.
But it’s unclear whether eligibility criteria will be tightened and other measures – including a temporary ban on rent increases – prolonged.
A Consumer Affairs Victoria spokesperson told The New Daily the state government would provide an update “soon”.
— Tenants Victoria (@TenantsVic) August 18, 2020
With just over a month left on the current eviction ban, that spells some good news for tenants left unsatisfied by the outcome of “good faith” rent negotiations with landlords.
According to Tenants Victoria’s Portraits of a Pandemic report, many tenants were met with landlords unwilling to budge, and others refrained from negotiating out of fears of reprisal.
Those who did receive a six-month reduction felt it was “hard won” but many were forced to settle for shorter reductions or rent deferrals – a future debt paid at the end of the moratorium.
Notably, many respondents expect their tenancies to be at risk once the eviction ban for rental arrears is lifted.
Some tenants go through ‘horrifying’ ordeal
Freelance photographer Leith Booker is one of the tenants worried about eviction.
He and his partner failed to reach an agreement with their real estate agent in April over a reduction on their Mornington Peninsula tenancy.
Despite both meeting the criteria for rental hardship (more than 30 per cent of income spent on rent), their agent rebuffed talk of a reduction and advised them to access their superannuation instead.
After months of waiting, their agent offered to backdate a weekly reduction of $30 – roughly 10 per cent of their rent – but withdrew the offer 24 hours later.
While drafting up documentation with renters service Anika Legal, Leith and his partner received another offer. But it contained a worrying clause.
“Basically, [the agent] told us we want you to take this offer and pay your outstanding rent by Friday, or we will be taking you to VCAT to pursue an eviction and pay all your arrears,” Mr Booker told The New Daily.
After Consumer Affairs Victoria intervened, the couple is facing a dispute resolution hearing with their agent in two months’ time – weeks after the current moratorium deadline.
“It’s an added stress that should have been resolved much earlier, but the fact is we’re quite confident as we’ve been through the VCAT process with previous landlords and agents before,” Mr Booker said.
“But it’s been pretty horrifying that [the agent] has been stone cold and shown no compassion for our situation – they even tried to divert us around the legal processes to prevent us from getting a reduction.”
Renters and landlords both face struggles
Better Renting executive director Joel Dignam said Mr Booker’s case was one example of the “fruitless back and forth” that occurs when agents get involved, with the process of negotiating a reduction skewed towards landlords.
Mr Dignam said some landlords still pursued evictions in the moratorium – even though they are technically illegal – to intimidate tenants.
“Those who have been unable to secure a reduction are those who might have to put off paying their utility bills, or be skipping meals in order to balance their finances,” Mr Dignam told The New Daily.
“The concern is that the moratorium will be lifted close to the same time that Melbourne may return to stage 3 lockdown and income support is tapered by the federal government.
“Without any other buffer, they are still accruing rental debt and are only staying in their current homes because of these eviction bans.”
Wakelin Property Advisory director Jarrod McCabe told The New Daily the second lockdown had fuelled a “second wave” of rent reduction requests, as more Melbourne renters found themselves out of work.
But property managers under his firm’s portfolio had entered talks in good faith, he said.
“It’s not just tenants suffering in this climate, there’s a lot of landlords who’ve experienced changes in employment and they need to make allowances to generate income to pay off mortgages,” Mr McCabe said.
End of moratorium could weigh down prices
Mr McCabe said without tapering the moratorium through a three-month extension, the number of rental properties flooding back onto the market could skyrocket.
And that means rents could be driven down sharply.
(For context, Melbourne’s rent vacancy rates have already risen from a pre-pandemic rate of 1.9 per cent to 3.1 per cent, according to property analysis firm SQM research.)
“People would start to walk away from their leases leading up to the end of that period, and that could have pronounced effects particularly on apartment rental values,” Mr McCabe said.
Meanwhile, Suburbanite principal Anna Porter said more renters could eye off regional areas for affordable tenancies, unless landlords were willing to permanently waive the debts accrued during the pandemic.
“I think we’ll see a downward trend in rentals, not just immediately, but over the next 12 months as this phenomenon starts to occur,” Ms Porter told The New Daily.
“What is already happening, and what will continue to happen, is a shift where buyers and tenants are looking towards regional cities for cheaper rents, combined with businesses in city areas that are functioning with a remote workforce.”