IN April the government made it legal for tenants to not pay their rent and mandated that property owners must accept an IOU. Under heavy pressure, loosely worded and unbalanced legislation was rushed through, leaving it wide open to abuse.
Now, some landlords are owed thousands, with the full extent of debt unknown. The total bill will be substantial. I would estimate $300,000 conservatively given the small sample I have seen. It is made up not only of outstanding rent owed by tenants who through no fault of their own cannot pay due to income losses, but a large sum owed by tenants who have simply chosen not to pay their rent, even though they have not been hurt financially by the pandemic. With big decreases in JobKeeper and JobSeeker, these figures could skyrocket, making a reactive response even more unsustainable.
In attempts to lessen the snowballing debts and keep some cash flowing, the government released the Rent Relief Scheme, following up with the Landlord Support Scheme after being informed the initial scheme was useless when a tenant stops both paying and communicating.
We have heard the government is working on legislation to cover payment plans for rent arrears. The concept sounds reasonable, but this could be another kick to the everyday people who own a rental property. The government should now be open about the legislation. Will it force landlords owed thousands to enter a payment plan with the tenant? Does it remove ability to issue a Notice to Vacate which has been promised and relied on? What will be the maximum term of the repayment period and maximum amount of income that can be directed to the debt? When the government first announced the no-evictions ruling, it essentially commandeered private property as social housing. Any other time, non-payment of rent would lead to eviction, with tenants needing to find elsewhere and maybe having to rely on the housing safety net the state government is responsible for providing. Instead, the government shifted this responsibility to the tradies, teachers, single mums, students, small business owners, nurses and aged care workers who own an investment property because they are working to create a better future for themselves and their families. In any other time, it is the government’s job to shelter those who cannot pay. The government did not predict this pandemic and does not have the housing needed but that does not change the fact financial responsibility for the safety net sits with the government.
Instead of tinkering around the edges with grants, the government would be wise to clear all rent arrears owed on behalf of tenants, assume responsibility for them and be the party that enters into payment plans with tenants. Private property owners have provided a service on behalf of the government, and now the government needs to pay their bill. If government takes on this debt and pays the property owner what they are fairly owed, not only does this cut out the middleman but gone is the need for administering schemes, payment plans and staffing up the Residential Tenancy Commission and courts. And back into the economy is the lost rental income, and, perhaps with time, somewhat restored is faith in residential tenancies.
Exchange of money for housing is a transaction like any other. No other buyer/seller relationship or contract has been so interfered with, however essential what is being traded may be. We have not seen credit card companies forced to freeze payments or “eat now, pay later” in supermarkets. Car loan repayments are debited, health insurance must still be paid, and GPs are not consulting for free. Yet it is OK for everyday people to wait, wait, wait and wait for payment.