NSW Can Fair Trading or NCAT force me to reduce rent?

It's stressful times and my tenant via my PM is threatening to take me to Fair Trading and NCAT. I am hoping to get a bit more clarity about the new tenancy legislation and how the Fair Trading and NCAT dispute resolution process works.

Tenant has asked for a rent reduction after being stood down, his wife doesn't work and he is the sole income earner.

They requested a 40% rental reduction, however my partner has also been stood down and working about 25% of his normal hours and I myself run a small business and business has been impacted by COVID-19, also getting job keeper for my business.

The rent I normally collect only just covers the interest on the mortgage for this property (I pay P&I on the mortgage). I have spoken to my bank and yes I can get a mortgage freeze but interest is still calculated for the 6 months, based on my own financial circumstances and the interest payable I have advised my tenant I can only give them a reduction of 20% which is deferred as I also don't pay land taxes so no benefit there, and I also need to pay rent at my own home.

The tenant got back to my PM and has demanded I share documents that show my financial situation, that I am dependant on their rent to pay the mortgage and provide evidence that I have spoken to the bank about mortgage relief and unless I do so, they will take me to Fair Trading...

I have read the rules over and over again and there's nothing that says I MUST reduce their rent and I am genuinely going to struggle myself if I have to give them a 40% reduction that I can't recover - especially with the uncertainty of my own business.

So if they do take me to Fair Trading and NCAT are they able to force me to give them a rent reduction or is it only a mediation process?

If I give them a deferral of 40% of their rent what if they don't pay me back? What can I do then?

 

How much is the rent per week?

 

No, they can not force you to give them a reduction. You don't even have to give them the 20% reduction that you have kindly offered, and I'd be less inclined to be nice to them with the way they are behaving. You most definitely do not have to furnish your financial details to the tenant. That's just plain ridiculous, that they feel they have a right to even ask.

This is a fair question. If they are paying under $400pw, the rent should already be 30% or less of their income, so I'd tell them to go whistle dixie.

It sounds like your agent may be a bit of a bleeding heart if she has passed on the demands of this tenant. Most of the good PM's have been very firm with tenants demands during this time. It's fine to request a reduction, but it's not fine to make baseless demands and ask for their LLs financial situation. This may come out if an NCAT hearing is called, but it will also be called for that the tenant furnish their own details as well.

 

Please make sure that your PM furnishes all notices as per normal as well. If you don't think your PM is cut out to deal with this, maybe look for a new one. What suburb are we talking about?

 

Thank you so much for your detailed advice.

The 20% reduction I offered is only a deferment, so I have requested it to be returned to me at a later date but the want it to be an actual reduction in their words they came back and said it gives them no financial relief whatsoever... the email tone from this tenant was horrid... so I do agree with you that with the way they are behaving I am definitely feeling less inclined to being nice to them after reading that email.

My emotions aside, the property is a 1 bedder in Point Piper (Eastern Suburbs) and rent at the moment is $550 per week which is slighlty below market rate, I didn't increased their rent when they asked to renew their lease for 12 months so they are on a fixed term until end of this year.

 

From a PM point of view, the tenant needs to prove that their original household income has been reduced by more than 25% after tax and benefits. He should at least be eligible for $550pw jobseeker, so how much his original income is and how much is the rent comes into play.

The onus should be on the tenant to prove they need the financial assistance, not on the owner to prove they can't afford to provide it.

Then your PM needs to really discuss with the tenant on various options - they could be a small reduction and then deferment, perhaps the partner is also eligible for jobseeker? Maybe ending the tenancy is the best move going forward, how long before his job will start up again, all factors to consider.

 

What job did the tenant have?

I have negotiated outcomes where the tenant works in retail etc and have offered them short term reductions - eg $50pw for 6 weeks until the shops are likely to be open again. The tenant is probably under pressure and hearing stories of other people's reductions so a small one can go a long way (from an emotional point of view).

 

OK, so for starters, 40% reduction would bring their rent down to only $330pw, which is a huge reduction on such an affordable property. You have been very generous, and yes, a deferment is something that I'd be seeking as well. They can't ask for 40% off their car loan, groceries etc, so why should you, a private citizen be so far out of pocket? They do have the option of moving elsewhere, presuming you'd be happy for them to break lease. In fact, I'd be offering that to them at this stage, if it were me.

As for a new PM, I'd give @Mel Morgan a go. She's been hanging around these forums for a good time & knows her stuff.

 

Agree they shouldnt be asking to see your financials, although some landlords and property managers are ridiculous enough to think tenants have an obligation to show theirs.
They may offer to in order to support thier cause but there is no requirement to.

Regarding Jobseeker, it's not an automatic $550pw by any stretch.
I was on Jobseeker for a few weeks in April and once the deeming test was done received $230pw - and that INCUDED a rental supplement and some kind of electricity supplement. Fortunatly I dont need my primary job or jobseeker to be able to survive.

Consider also thier attitude might have been stirred by initial dealings with the PM however nice the PM may seem to you.

Try and see if you can meet them in person without the PM and go in as the good cop. If things really break down they might play hardball and just stop paying altogether.

I know someone in the Potts Point area who recieved 50% reduction for however long. They had just started a new job and lost it. To make matters worse they were stuck interstate unable to travel (govt restrictions) for the foreseable future so basically couldnt pay rent and couldnt move out. They could make 50% rent and that was the best outcome until they either got back to move out, or if lucky found a new job.

 

Oh boy the entitlement mentality again
Whether the landlord is bill gates rich or broke doesnt matter.

So the tenant is going to "decide" how much rent they should be paying after assessing the landlords financial position!

Maybe I'll ask for the financials of my bank and I'll decide whether I should pay my mortgage or not

 

I dont agree with it, but it appears that some landlords and PMs think they can demand tenant financials too.
Some even feel compelled to suggest withdrawing super. Dangerous move.

 

Its pretty common sense to me that when you are asking for a favour or a gesture you provide whatever info that helps your case

Chalk and cheese situations

Edit: asking them to withdraw super is illegal, i dont think many pms would be asking this

 

Add to this that many PM's look at the tenant's financials before approving them to move into a property, to assess if they can afford it. Just like a bank looks at your financials when applying for a loan.

 

Ironic how info they willingly provided at the start of the lease is fine but when it comes to asking for a reduction, it suddenly becomes a massive breach of privacy and shock horror

Edit: op, banks definitely have hardship and repayment holidays, it may not be what you want or think is fair, it's better than nothing

 

You may want to start looking at your situation and work out what you can cut back.

Generally when negotiations fail, the tenant will just stop paying the rent all together. You will want to get yourself ready.

 

Spot on. Dont back them into a corner as you probably have more to loose in all this than they do.

I wouldnt be surprised if the Tennants approached your PM with thier situation and got nothing in response other than a generic letter advising them of the arrears policy (one of the Ray White branches made the evening news for this approach to 'working with tenants').
That will do nothing but put the tenant into a mood for pushing back, and certainly wont entice them to 'offer evidence' etc if they are not actually required to.

The OP is renting thier own residence, I'd suggest approaching that landlord for a rent reduction too.

 

Absolutely, a PM would be negligent if they hadn’t assessed if the tenants income was sufficient. It shouldn’t put them in rental stress when signing up to a yearly commitment of tens of thousands of dollars per year.

 

I am a tennant and the most I have ever been asked to produce by way of 'financial capability' has been my two most recent payslips.

I'm not sure what PMs are telling you they are doing in that regard, but any LL who believes the standard is much more is either naive or being hoodwinked.

I say that from nearly 20 years of signing leases, the most recent being this earlier this year where I had no income to show anyway.

 

I don’t think LLs, if they have a PM need to know the detailed personal financials of a tenant. Provided their gross income is suitable that should be enough.
On occasion PMs do provide much more personal information which really doesn’t need to be divulged.
If it was my rental application I wouldn’t be happy about it, part of the reason I have always hated the idea of renting, lack of privacy.

 

Landlords or PMs, it's all I have ever been asked for and provided.
I assume it proves you have a job to meet rent obligations, but 12 months can be a long time to hold some jobs. The last lease I signed I didnt even have a job and did not provide any evidence of divvy income either.

I'm not concerned, however if there is an owner out there thinking the vetting process in much more involved they may be disappointed.