ACT ACT government - relief package for residential landlords

On 2 April 2020, the ACT Government announced its relief package for residential landlords as part of its response to Covid 19

Features of the package:

• landlords must lower rents for impacted tenants by at least 25%
• ACT government will provide 50:50 matching reduction in quarterly rates and land tax payments, capped $1300 per quarter for up to 6 months
• one off $150 rebate to all rate payers in 2020/21

Package is supposed to be worth $214m, but not detailed how much is going to all rate payers and how much is expected to be for the private rental market for tenants claiming financial hardship.

The press release is at How residential tenants will benefit from the ACT government’s $214 million stimulus package

Is this relief helpful?
Will it reach landlords?
Will it set the discussion and expectation of tenants?
Political stunt?
Your comments and situations??

 

Seems to be put in place to help tenants, not landlords, BUT at least it's not helping the tenants at the landlords expense.

 

I have a couple of apartments in Canberra and had a tenant request a rent reduction because they said their shifts had been reduced due to COVID-19 but they didn't specify an amount so my PM went back and asked them how much reduction do they need and do you have proof of reduced hours - that was 12 days ago and they haven't got back to the PM yet. But in this situation, here is how it would play out for me if I reduced the rent by 25% (the minimum amount for the Govt assistance):

- $550/week current rent reduced by 25% comes to $412.50 ($137.50 reduction per week)
- I then get a rebate of half of this off my rates/land tax (according to Mr Barr, but details are a bit vague). So I would get $68.75 per week in reduced bills.

- That would leave me $68.75 out of pocket (we all have to "share the pain").

- However reduced income would mean I make a greater loss on the property. Let's say over 20 weeks, it's $1,375 less income, adding this amount to my on paper loss. I should get 37% of this back, approx $508, in my tax refund. Leaving me about $867 out of pocket.

But I keep my tenant and then hopefully it doesn't last more than 20 weeks and I am helping out someone who needs somewhere to live and has less income due to no fault of their own. As a landlord I am happy with above but that's at 25% reduction. If I had to go 50% or more across multiple properties it would be painful.. The question is also raised, should the tenant have to dip into their savings to meet the shortfall or should I have to dip into mine?? In this case it's the govt and landlord helping out the tenant - should the landlord have to share the financial loss with the govt or should it all be govt? Tough question..

 

Clearly, the trend of governments is to help the employed person who has lost a job. It is visible. It is not so much on those who provide services or investors. The implicit assumption is that they are either having more financial options or their situations are not visible.

ACT Government has placed a threshold of 25% reduction in rent to be worthy of ACT Government discounts on land tax and rates, but blanket 6 months ban on eviction. Landlords have lost on the important eviction issue, but it is not clear how wide ranging the ban on eviction is.

 

For the scenario of loss of rental income, I have landlord's insurance on all my properties.

My fear is that government meddles such that my risk mitigation measures will be rendered worthless. If my landlord insurance requires that no rent should be reduced in an existing lease agreement, I should not reduce rent. If I am forced to reduce rent by the Government, then it should compensate me for vitiating the landlord insurance and loss of rental income.

I have not asked the Governments for help but if it does me financial harm, it should compensate. The ACT Government is a creature of the Commonwealth which is governed by the Commonwealth Constitution. Even the Commonwealth cannot seize property without due compensation on 'just terms'. I wonder is the ACT Government then liable to compensate for 'retrospectively' voiding my insurance interests (rental arrears) already made with the insurance provider?

 

It is not clear whether the rent reduction must be permanent or can just be for the duration of land tax relief period. I believe now in the act rent increases are basically capped at cpi so maybe you couldn't put it back up to normal at the end.

Yes it is not clear whether a forced rent reduction will provide an out for the landlord insurer.

 

Have you seen this more detailed update just appeared on my facebook

It is actually far more balanced than I would expect, knowing the ACT labor government well where one green holds a great deal of power and they are extremely left wing, I would have actually been expecting something far worse than qld, so qld seems bizzare compared to this

https://www.covid19.act.gov.au/__da...XLyxPrCPJTxDOKwfENSnL8g6_NhkodsvHHotuWzMrZi7g

In actual fact this sounds so far the best for landlords of anywhere

 

Why complicate so much?
Why can't the Gov, simply give rent assistance and done with it?