News Coronavirus Residential and commercial tenants call for relief as coronavirus rental crisis looms

Residential and commercial tenants call for relief as coronavirus rental crisis looms

Kye Kemp is concerned about finding another rental. Photo: ABC News/John Gunn
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Kye Kemp is being forced to leave the home she shares with her young daughter, part of a wave of renters caught up in the income-killing coronavirus chaos that could see more than a million Australians added to the unemployment queues.

Ms Kemp has been paying her rent, but her landlords have lost work due to the coronavirus outbreak and need to move back into their house.

“Given the crisis, the availability of properties and real estate agents ceasing open home [inspections], looking for a new premise now doesn’t seem reasonable,” she said.

“I do not know what I’m going to do.”

Ms Kemp is one face of the virus-induced crisis brewing in the rental market.

Many industries have been shut down for health reasons, including tourism, the arts and swathes of hospitality, or are limping badly because global travel has stopped, and people are cocooned in their homes.

Australia’s rental system is made up of 3 million households that rent homes, and landlords who rely on the payments for income and to service mortgages.

“My landlords have got mortgage repayments, plus the rent they’re paying on their own house,” Ms Kemp said.

“I respect and understand exactly where they’re coming from, and it’s a very unfortunate circumstance, however something needs to be done to prevent landlords being stuck through this time, as well as all tenants.”

Commercial tenants caught in foot traffic collapse

Commercial tenants are stuck in the same mire.

Shopping centre landlords such as Stockland and Scentre Group have done little, tenants claim, as they await Government action.

At nearly 200 Just Cut salons across the country, business has collapsed.

First foot traffic diminished, then social distancing rules made customers wary — its 2,500 employees are sitting ducks.

“We’re concerned for the health of our stylists and our clients,” Just Cuts chief executive Denis McFadden said.

Just Cuts CEO Denis McFadden with staff in one of the salons. Photo: Just Cuts

Mr McFadden had called for a government-sanctioned shutdown of the hairdressing industry as protection from landlords.

By Friday, he could not wait any longer and decided to shut all stores for at least four weeks, without a forced closure of hairdressers.

“National cabinet has today failed to act on our pleas to add hairdressing to the list of non-essential services,” Mr McFadden said.

“Our stylists are scared. Our customers are scared. How can we ask them to continue when everything and all the medical experts say the risks are too high?

“So, we have today taken the decision to shut our doors for at least the next four weeks and are recommending to our independently owned and operated franchisees that they do the same.”

On Friday, weeks after fears of the virus dried up foot traffic and trade, the peak body for shopping centre landlords, the Shopping Centre Association of Australia, called on its members to not terminate leases of small and medium businesses if they can’t pay rent.

“Governments have received direct feedback that some owners are not engaging with the empathy that is required during these times,” the Association’s chair Peter Allen wrote.

“This is surprising, and if correct, very disappointing and frustrating to hear.”

Premier Investment’s broadside to landlord

Billionaires don’t wait to be asked their opinion.

Under the banner of Premier Investments, retailer Solomon Lew owns brands including Just Jeans, Smiggle and Peter Alexander.

On Thursday, Premier announced it would shut more than 850 stores across the country, stand down thousands of staff and refuse to pay rent for the duration of the shutdown.

In a statement to the stock exchange, Premier noted that 70 per cent of its stores in Australia and New Zealand had leases expiring this year or were already in holdover periods, which Roger Montgomery from Montgomery Investment Management described as a “threat to close stores if landlords don’t play ball.”

On Friday, Premier escalated matters, issuing a scathing statement reminiscent of Mr Lew’s public rebukes of retailer Myer.

In the statement, Premier Investments executive director Mark McInnes criticised Scentre Group, alleging the Westfield owner failed to inform Premier that its team members had been exposed to customers who had tested positive for COVID-19.

“It is unacceptable for landlords to play roulette with the lives of retail employees and customers by not doing everything they can to protect them,” Mr McInnes said.

Scentre Group rejected Premier’s claims about its behaviour.

“In relation to Westfield Carindale, our retail partners and centre management followed the correct Qld Health protocols,” it said.

“The Qld Health advice was these individuals posed no risk to any customers, retailers or employees.

“As a precaution, the relevant retailers closed their stores temporarily for deep cleaning. Centre management also conducted additional cleaning. We continue to follow the advice of health authorities.”

Some councils and states make concessions for tenants

Tenants of Adelaide City Council have not had to take matters into their own hands — they won’t pay any rent for at least three months.

“We know that it’s easier for business to crank up than to close down and open again,” Adelaide Lord Mayor Sandy Verschoor said.

“So, we want those tenants to still be there at the end of this.”

Small landlords including Michael Illief are making accommodations, and Mr Illief might be the smallest — he rents out two car park spaces.

“[The tenants] basically want a free rental … I actually agree with that, there’s no issue. I did mention to them, I can talk to them again back in June,” he said.

Residential or commercial, everyone is waiting for details on rental policy from the National Cabinet, which was delayed all week.

Tasmania has offered a stopgap solution — this week its Parliament passed laws banning evictions for at least the next four months.

In addition, Australia’s largest banks have already offered to pause mortgage repayments for six months.

Advocates for renters want to see an immediate stop to evictions until the crisis is over.

“We have people, and we’ve had people coming to us for the past week, saying, ‘I have no income now, I can’t afford to pay my rent, today’. So this is an urgent problem, we need to see the action immediately,” Tenants’ Union of NSW senior policy officer Leo Patterson Ross said.

Australia’s economy is deeply rooted in the value of housing.

A spike in evictions and forced sales could accelerate what is already expected to be a sharp fall in property prices.

Pausing mortgages on loans and preventing evictions could buy both sides of the rental equation valuable time to work out a soft landing.

“We need to have a conversation, a whole of community conversation, about how to manage the rent arrears burden, the mortgages, the utility costs,” Mr Patterson Ross said.

“To make sure that the whole community survives this crisis together and recovers from it together.”

For single mother Kye Kemp, there is no simple answer.

Her landlords have lost their jobs in the city and now want to repossess the home they had rented out.

Ms Kemp does not want to go — her family are nearby, there is work to consider and her daughter is in a kindergarten located at the primary school she will attend next year.

“There’s thousands of Australians in this predicament and it’s only going to get worse,” she said.