PM announces landlords will have to do their bit!!

As a landlord I’m feeling a little ill and stressed,

PM press conference today
“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.”

If tenants dont pay the rent or reduced rent, how do us landlords pay our home loans, so many questions

 

You should have a buffer of 6 to 9 months rent to use.

This would be the same buffer you use if your property is empty for 6 months and you can't find a tenant, or if you have any expensive maintenance or repairs to undertake.

Surely you have a buffer??

 

You’ll hold on if you can and sell it if you must. You aren’t guaranteed a positive return when you invest.

 

Agreed. No argument there. “Borrowing to get ahead” vs “spend money on things” is not different. Just a personal judgement as to which will bring the most reward.

 

Under the current government we have seen household incomes and wage growth fall, but costs of living increase. Real household disposable income has been falling since 2016.

If by 'everyone else', you are referring to renters, on aggregate they have been dipping into savings since 2016 to keep their heads above water. There is nothing left.

Contrast this with Landlords who have seen surging house prices and rents. That's why the Morrison government is targeting landlords. Those earnings can be tapped in our time of need, and we surely need every little bit.

But remember 'everyone else' doesn't include the banks. They have also been asked to help out in these unprecedented times.

 

Not everyone has a loan, but for some people rental income is the ONLY income. If that goes, then what? Centerlink?

 

I 100% agree, but I do actually think that everyone should have that 6 to 9 month buffer.
But (un)fortunately most people are terrible with money.

PS: Was there anyone else questioning why a property manager would make statements like that?

 

Some banks are said to be freezing home loans I'm unsure if this applies to investors.

That is if you're directly affected by COVID-19.

 

They both joined at the hip

those who borrow and invest need those who spend all their money, else the economy wouldn't grow as much and you don't have many renters and there isn't many business around and less credit going around and less return for your properties

Look at it now imagine these guys don't spend money and just save, everyone suffers

 

Just waiting for an email from PM (property manager) saying they will reduce management fees in this turbulent time.

 

Presumably dipping into capital, either via selling down or refinancing. Centerlink isn't going to help out someone with a million plus in investment assets.

 

Not really true for WA

Being West Australian I understand all that matters is the East Coast ecconmy

 

Surging rents, Where? They have barely tracked inflation in many cities while insurance premiums have doubled in the last 5 years and Council rate rises consistently run ahead of inflation. CBA just announced that they will not pass on the recent rate cut other than for small and medium businesses.
Your perception is a little different to reality.

 

I have been advised that of of my agencies will not be doing routine inspections until advised..
Hope they don’t advise the tenants of this. They are now just a rent collector charging 8.5%

 

well that should apply to tenants too, you should have a buffer, and not live week to week, so if you cant pay your rent, youre out!

 

It will be incredibly difficult to sell a property if it comes with a lease in place with a freeloader who is entitled to live in it indefinitely for nothing whilst the owner has to pay all costs like rates etc for no return. Assuming there was at least a right to recover some unpaid rent from the bond if the tenant ever does choose to vacate, the tenant would also be aware that they wouldn't get their bond back anyway so they would treat the property like rubbish and leave it filthy. I would imagine if you sold a property with a freeloader in place you would get a fraction of the amount the same non-tenanted property would acheive. Probably not enough to cover the loan. So selling up won't be much of an option for landlords who can't afford 6 months or more of supporting a freeloader.

If this comes into place I imagine noone will purchase a tenanted property whilst the law remains in place (unless at absolute bargain prices), nor will anyone lease or release a vacant property, they would sell it or leave it empty, empty is better than putting someone in it who can legally decide they don't want to pay rent and is completely impossible to evict.

A law like this would have an impact on property managers too, they would have to change their model of charging landlords from a percentage of rent collected to some other method so they continued to get paid for their time managing these zero rent properties. So the landlord would also be paying similar property mangement fees on top of all the other costs for their zero rent.

Yes so many questions

Does the right to remain in the property free continue for the non payer even if a fixed term lease expires and/or valid notice has been given on grounds other than their non payment. eg a landlord may genuinely choose to move into the property themselves under these conditions and give an otherwise legal notice to do so, but if the tenant is a non payer is it still not possible to evict them due to their non payer status. I guess it could be considered to be like a retalitory eviction for the tenant exercising their rights to a repair. The tenant would be exercising their legal rights to not pay rent, the attempt to move into the property to avoid the issue of having to provide the free rent would therefore be illegal.

Will the tenant be under any obligation to pay any benefits they receive designed for rent to the landlord so they are not living completely rent free? Current rental assistance payments don't go to the landlord so the tenant can just spend them and not pay rent (of course currently they can actually be evicted for this). I am guessing the payments designed to assist with rent will probably be paid directly to the tenant, and the tenant can just squander them on other things with no consequence.

I presume the freeloader will still have rights for everything to be repaired in a timely fashion too. Usually if a tenant takes a landlord to tribunal for failure to repair something in a timely fashion, a rent reduction is awarded, if the tenant is paying $0 I wonder how this will work, perhaps there will be also be a law that the landlord can be fined or have to pay compensation in addition to the free rent. Because I can imagine most landlords, even if they can afford to, wouldn't repair anything for the freeloader tenant unless it was something that was going to damage the property if not repaired. No hot water? Freeloader can have cold shower.

If the bank sells the property due to the landlord being unable to pay the mortgage due to the freeloader, or the council or the state government sells the property due to failure of the landlord to pay rates, water charges, land tax etc, can the tenant be evicted by the bank/govt at that point in order to acheive a reasonable value for the property? The bank probably can't achieve sufficient from the sale of the property to cover the loan even for a low lvr loan if it comes with the freeloader in place.

My landlord insurance covers 14 weeks rent default or $5000, whichever is less. The landlord must take steps to evict in order to make the claim for rent default, so a landlord who voluntarily allows the tenant to be non rent paying for a period on the basis they will pay it back will lose the right to claim if the tenant doesn't pay it back. I am sure the insurer hadn't counted on the law changing so radically so the non payer simply couldn't be evicted at all and there is nothing specific, of course, in my policy that deals with that scenario, it might take a legal perspective to determine if insurers would be obligated to pay for at least the 14 weeks in this situation. The insurance payout for rent default, doesn't occur until the tenant has vacated leaving rent arrears in excess of bond so it won't help with cashflow of course.

I wonder if when they draft this legislation they will consider any of the above.