Government says tenants don't have to pay rent if under hardship

Discussion in 'Property Market Economics' started by Jess Peletier, 20th Mar, 2020.

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  1. TangibleGoodwill

    TangibleGoodwill Well-Known Member

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    Not really reading all this as tenants wont have to pay rent, more the government will assist with hardship.

    If I as a landlord was given mortgage payment relief or land tax exemptions for example I would gladly pass on those savings to my tenants, one of which earns $160k a year and has just sold a property in Brunswick for $1.5m.
     
  2. Guest

    Guest Guest

    I like @Sackie's idea of a discount for upfront payment for a long period of time, though tenants with cash in that quantity are less likely to be those which get into financial trouble.

    Another option may be to negotiate with tenants, either at the start of a lease or even during one to discount the current rate they are paying to under market rates, with an increase at the half way mark which takes it to over market rates (ultimately balancing out over the period of the lease). Then hoping things have improved enough for the tenant to sustain the commitment.
     
  3. MTR

    MTR Well-Known Member

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    Wish we could keep/use bond
     
    Last edited by a moderator: 10th Oct, 2021
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  4. Luckycharm

    Luckycharm Well-Known Member

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    I like the npv neutral adjustment, very neat. But if tenants don't have to pay, will they pay a fair amount?

    I was thinking 'hardball' solutions such as withholding non urgent repairs... eviction on other grounds...declaring the building uninhabit.. to deal with tenants who don't pay who are signed up on a lease.
     
  5. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    lets all have a a Remote hug, the only way we will survive well is to be a big Aussie tribe....... regardless of any pigeonhole !

    ta
    rolf
     
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  6. Perthguy

    Perthguy Well-Known Member

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    While all this is true there is a group of people who have set up retirement income streams based around dividends. Their assets are falling in value and revenue streams from dividends will dry up. It's really serious and nothing to do with leverage. Can only hope they have decent buffers in place.
     
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  7. MyPropertyPro

    MyPropertyPro REBAA Buyer's Agents Sutherland Shire & Surrounds Business Member

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    I didn't read it like this either, until the comment about landlords essentially being grouped with the banks and government i.e. we can help to bail out those who fall under hardship. It was that line that concerned me.

    I can tell you one thing, if the government thinks there might be a potential bank problem now (and they do, evidenced by govt and RBA actions taken in last few days), wait until the burden of not paying rent is moved onto landlords. There is still an approximate 30% national holding of housing provided by private landlords, which is the entire point of negative gearing - it removes some of that burden from government.

    I have significant buffers in place, however many don't. Whether it's right or wrong, when people default, the market will be flooded with distressed properties, prices will fall and this will add enormous amounts of pressure onto what will already be a strained banking system from PPoR defaults. What needs to happen is that the government shore up rents by having the TENANT apply to GOVERNMENT for extraordinary rental assistance, meeting specific extraordinary criteria, and if approved then that rent still gets paid direct to the landlord/property manager with all normal eviction methods holding firm so landlords are protected. Otherwise, I foresee a bloodbath.

    The only thing protecting landlords now is due process. If this is removed by not allowing tribunal arrears and evictions to take place, it completely undermines the system and will be worse for the entire property market, the banking system and, ultimately, the tenants, when this is over.

    My caveat to all this and one that has already been said is that throw away lines in the media do not equate to policy. There is a better than even chance that once this is thought through on the ramifications of transferring the burden to private landlords, the policy won't be written as it's being loosely interpreted here (by myself included). In reality we should probably wait for whatever comes out. And hopefully by the time it does, this will be coming out the back end. Remember, fundamentally it's not an economic problem, that is just the symptom.

    - Andrew
     
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  8. Sackie

    Sackie Well-Known Member

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    What does the share market have anything to do with me reducing rent and getting a lump sum payment for a property? no idea what you mean nor any idea what you think I'm undermining.

    You sure a fever ain't comin on...:p
     
    Last edited: 21st Mar, 2020
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  9. Sackie

    Sackie Well-Known Member

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    Just trying to reduce risk where I can. I sense real estate market sentiment is shifting. Slowly. But I sense it.
     
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  10. ttn

    ttn Well-Known Member

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    Investment in shares for dividends and IP for rental income and capital gains so we should be in "Double Happiness" mode ;)
     
  11. Joynz

    Joynz Well-Known Member

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    The thread title doesn’t seem accurate - and seems to have panicked some forum members.

    When I read the linked article in the OP, I don’t see anything that says the govt has said ‘tenants don’t have to pay rent’. The govt is working on a relief package - yet to be specified.

    Some forum members are jumping at shadows.
     
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  12. Jana

    Jana Well-Known Member

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    Yes, the topic itself is misleading and others just put their own views. Nothing will anyway happen. How could govt can push any landlord to bailout?
     
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  13. Melbourne_guy

    Melbourne_guy Well-Known Member

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    Maybe because some have made poor investment choices and are heavily over-exposed now the tide is going out? :rolleyes:
     
  14. FireDragon

    FireDragon Well-Known Member

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    The article says:
    “All Australians are going to be making sacrifices, obviously, in the months ahead.
    “And everyone does have that role to play and that will include landlords, at the end of the day, for people who are enduring real hardship.”

    I expect some tenants won't pay rent or request rent reduction and I told my agent I am happy to help the tenants with financial difficulties, but I just hope there is not a large number of them.
     
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  15. Sackie

    Sackie Well-Known Member

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    2 Chinese, 1 Korean, 1 Thai.
     
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  16. AndyPandy

    AndyPandy Well-Known Member

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    Would anyone on here proactively drop rents for 6 months in order to ensure that tenants are motivated to keep paying on time? I'm considering it. Interest rates are lowest possible, it's only fair to pass some gravy to the tenants as well.

    Wondering what kind of insurance and legal issues would this create in case the tenants don't pay rent anyway after dropping it?
     
    Last edited: 21st Mar, 2020
  17. ndpjai

    ndpjai Well-Known Member

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    I did reduce the advertised rent from $650 by $25 per week to pay 6 months rent in advance, tenants agreed as well. I'm thinking of reducing rent by $25 per week for next 3 months for a korean travel guide.

    Everyone needs to assist in this hard time on a case by case basis.
     
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  18. AndyPandy

    AndyPandy Well-Known Member

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    Might be a bit hard for most tenants to pay in advance.
     
  19. ndpjai

    ndpjai Well-Known Member

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    New tenants- pay in advance if they can pay, as we dont know how they will pay the rent, more risk involved
    Reduce rent- for existing tenants to reward good tenants
     
  20. Melbourne_guy

    Melbourne_guy Well-Known Member

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    I would never consider paying in advance for rent. There is little leverage left if the landlord decides to forego mandatory landlord obligations.