18 May 2020
As you may be aware the Residential Tenancies (COVID-19 Response) Act 2020 (the Act) has now been enacted to address the hardship being experienced by both tenants and landlords as a consequence of the COVID-19 coronavirus pandemic.
Among other measures, the Act provides a framework for tenants and landlords to negotiate in good faith with a view to maintaining the lease and reaching agreement as to possible rent relief options during the emergency period. That relief could include options such as a temporary rent reduction or a rent deferral.
Consumer Protection has been notified that some agents/property managers have received requests from tenants for rent relief and have failed to notify their client landlords before rejecting the request. As owners of rental property, landlords are able to identify their best interests taking into account their own particular financial and other circumstances. By denying landlords an opportunity to explore options with tenants experiencing financial difficulties, it may be the case that a less favourable outcome is achieved for them.
Agents/property managers are reminded of their fiduciary obligations under the Real Estate and Business Agents and Sales Representatives Code of Conduct 2016 (the Code). Rule 5 of the Code provides an obligation to act in the best interests of your client. This includes providing your clients with information that would be relevant to their decision making. The failure to obtain an instruction from your client concerning their response to a tenant’s request for rent relief is not acting in their best interests. The Code requires an agent/property manager to act honestly with parties involved in a transaction and to exercise due care, diligence and skill in all dealings.
The State Government’s Residential Rent Relief Grant Scheme (RRRGS) provides grants equivalent to four weeks’ rent up to a maximum of $2,000 to be paid direct to landlords to assist tenants who are struggling to pay their rent after losing their jobs due to COVID-19. One of the eligibility requirements for the scheme is for a tenant and a landlord to either have a written agreement in place providing for the payment of a reduced rent or to have engaged in Consumer Protection’s Residential Tenancies Mandatory Conciliation Service in order to reach an agreement. Agents have an obligation to facilitate such arrangements.
The Act is not intended to relieve tenants of the obligation to pay rent. Rather it is a recognition that in the present circumstances some tenants will invariably face difficulties in making rent payments, may accrue rent arrears and many will not be eligible for the RRRGS. It is in the best interests of all parties, including agents and property managers, that an agreed plan for the payment of any rent and arrears is reached. A guide covering key issues for consideration when negotiating a rent repayment agreement is now available and Consumer Protection is continuing to develop additional resources to assist landlords and tenants negotiate their way through this difficult time.