WA Residential Rent Relief Grant - Landlord benefit if tenant not in arrears?

Hi,

A tenant has applied for the Residential Rent Relief Grant. As the tenant isn't in arrears, I assume they are after the grant which pays the increase in rent, up to $2k, with the extended fixed term lease. The landlord and the tenant has to agree to terms and conditions when accepting the grant.

I am struggling to understand what the benefit is for the landlord as there are two key clauses in the T&C's

Clause 1.6c
"if the State determines in its absolute discretion that:
(i) an Applicant no longer satisfies, or never did satisfy, the eligibility criteria for the Scheme;
(ii) the Applicant or the Landlord made or provided any false, incomplete, misleading or deceptive statement or information; or
(iii) the Landlord has failed to comply with the set-off requirements in clause 1.5,
the State may seek recovery of some or all of the grant paid to the Landlord. The obligation for a Landlord to repay to the State any grant represents a debt due and payable by the Landlord to the State."

My understanding of this clause is that the landlord is obligated to pay back the grant if the tenant's application is deemed ineligible.

Clause 3.2
"During the selection process the State will review the Application and supporting documents provided by the Applicant to determine whether on the face of it they are complete, correct and accurate. The State accepts no responsibility for ensuring that the Application and supporting documents provided by the Applicant are complete, correct and accurate, or give effect to the matters represented by the Applicant."

My understanding is that the State is not responsible that the tenant's application and supporting documents are true and accurate.

In other words, if the tenant deceives the State and the grant is paid to the landlord, the landlord bears the risk to repay the State.

Given the current tight rental market in Perth, why would a landlord agree to these T&C's? Surely I have missed something.

Thanks

 

I am a WA Landlord and a tenant back in 2020 applied for this same grant. As a LL I had to agree which I did. The full $2k was paid to me and I simply used this as a credit on the rent (ie. rent was $540pw) so the tenant was advised they could miss one fortnightly payment ($1080) and pay only $160 the next fortnight (ie. 4x$540-$2000= $160) and thereafter rent as normal.

Had there been any issue with the grant being paid or it being obtained fraudulently, the $2000 would still be owed by the tenant and treated as non-payment of rent.

The smart thing is that the grant is paid to the LL for rent, so the tenant can't spend it on other things.

There was no issue from my end.

 

The fact you get free money from the state?

And you think its better to not accept it just because there's some very specific and unlikely situations where the state might ask for it back?

 

Whilst the State does pay the landlord $2k, the landlord is no better off financially if the tenant is not in arrears. The $2k offsets the increase rent for the extended fixed term which I assume has to still be market rent so the landlord could go get another tenant at obtain the same rent increase. Hence the landlord is no better off by agreeing to the grant.

If the current tenant is about to go into arrears but not yet in arrears, then there may be some benefit to the landlord depending on the remaining period of the current fixed term lease.

I'm trying to understand what's in it for the landlord as whilst this is likely a small risk, why take on more risk for no gain (I have no idea what percentage of applicants obtain the grant but shouldn't either purposefully or through misunderstanding, nor the percentage of applications the State audits and takes action on).

I sense this grant worked well in 2020 with the first lockdown and uncertainty. However, now that the people are employed and the rental market is tight, the grant no longer provides minimal benefit (potentially disbenefit) to the landlord whilst tenant to get $2k from the State.

 

It's pretty crazy you see this as "no gain". Even if you see it as your tenant getting a free $2k - it sounds like you'd rather that not happen because your attitude is "what's in it for me?".

I don't think you appreciate the circumstances of when it might get clawed back either. I would very confidently bet the amount of times its been clawed back from an innocent landlord would be zero.

 

It is not at all for the LL benefit, it is for the tenant's benefit,

The only reason the LL has to agree to the conditions is so that the LL doesn't receive the money and then spend it something rather than offset it against the rent.

Do the right thing by your tenant.

 

After initially reading the grant overview, I was solely thinking if the tenant has been good quality tenant as it required extending the lease for 6 months and is the tenant expected to be able to afford the property after the grant runs out. Once I identified that the risk of a fraudulent claim lies with me, the "what's in it for me" thinking came in, can I trust the tenant as there is no way to verify his claim, and why should I take on the potential of a mess to sort out.

I too would be surprised if the likelihood of occurring is high. However, why has the State then transferred this risk to the LL. I expected to see the State claim the grant monies from the respective party who deceived the State.

I have to disagree as there is a LL benefit for rental arrears. The LL may not be covered by insurance and hence getting 75c for each $ of arrears is better than 0.

I have to also disagree with this as I don't see how if the tenant's claim is found to be ineligible in the future the landlord has to repay the State makes the LL use the grant monies appropriately.

I assume the grant was for future rent support rather than rent arrears. So the rent was increased by a total of $2k over the term of the newly agreed lease. I.e. if it was agreed to make the fixed term lease for the next 6 months the rent was increased by $2000 / 26 weeks = $77/week or for 12 months $2000 / 52 = $39/week. I like the way you implemented as (1) it is fair with both LL and tenant getting the cashflow benefit of an upfront payment, and (2) the tenant gets used to paying the higher weekly rent.

If it was for rental arrears then I think it's been implemented incorrectly. (I only think it may have been for arrears as it was agreed for rental payments to be missed i.e. arrears). The grant only covers 75% of arrears. i.e. for every $1 in arrears the LL bears $0.25 of the loss, so you would have had to give the tenant another week and a bit of free rent. The grant does have a higher limit of $4k for this.

In summary, I think this thread has confirmed my understanding that there is limited benefit to the LL where there are no arrears and the LL bears some additional (though a miniscule likelihood) risk. Perhaps this risk was a slight oversight in the haste the grant was stood up. Perhaps people don't read T&C's. Or likely I'm just over zealously risk averse.

 

I think you're assuming that the state will attempt to recover the money from you if the tenant lies about eligibility. I would say the chances of that happening are pretty much zero.