VIC Teant asking for 50% rent reduction

Discussion in 'Property Management' started by sam999, 12th May, 2020.

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  1. sam999

    sam999 Active Member

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    Hi our tenant is asking for a 50% rent reduction for for 4 months citing hardship due to COVID however they are not willing to provide any details or proof that they have been impacted and have lost job/hrs etc
    they keep saying that they can help to apply landlord for the govt grant
    I have looked at the vic govt website and the landlord grant process seems a bit confusing
    it says that LL and tenant need to negotiate a rent reduction 1st. if we agree for a rent reduction but the tenant is not eligible for the grant than ll will be out of pocket?

    what should we do in this situation? tenant is playing the hardball and does not seem to be willing to work with the property manage,property manager seems out of ideas and tenant is already behind rent by 3.5 weeks
     
  2. Propertunity

    Propertunity Exclusive Real Estate Buyers Agent Business Member

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  3. wylie

    wylie Moderator Staff Member

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    Welcome. :)

    There are lots of threads on how to deal with this, but because the states seem to be slightly different I'm not sure of the answer but I'm sure one of the property managers who knows the rules for NSW will jump in soon and give you an answer.

    This has been coming for a while, and not keeping updated with the legislation would make me think perhaps you should be looking for a new property manager.
     
  4. sam999

    sam999 Active Member

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    to clarify the property is in VIC
    (I am in NSW)
    I had put the VIC in title should have mentioned in post too
     
  5. wylie

    wylie Moderator Staff Member

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    I thought I read Vic, but when I re-read the post I thought I'd imagined it. But it was in the heading all the time. Doh!

    Victoria property manager should jump in soon.

    Calling @Lil Skater.
     
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  6. sam999

    sam999 Active Member

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    Coronavirus (COVID-19) rent relief grant | Housing.vic.gov.au

    how can ll negotiate rent reduction without knowing that tenant is eligible for any relief
    mortgages are not stopping, neither a rates and repairs , it appears that govt has given a free run to bad tenants with rushed legislation, if the renters are really hard done than how about govt directly assists them instead of forcing private citizens to pick the tab
     
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  7. Peter_Tersteeg

    Peter_Tersteeg Well-Known Member Business Member

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    What I've been learning (via similar experience) is that in Vic your PM can apply for mediation to help resolve this.

    Speaking to the mediators, they indicated that most people are offering a temporary rental reduction of 15%-20%. A 50% reduction is unreasonable. It's also quite reasonable for you to expect evidence of their hardship.

    Something that it appears the mediators are also looking at is a comparison of your hardship with the tenants. If you're still employed, you're probably going to have to take some sort of a hit, but it should only be for a few months.
     
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  8. sam999

    sam999 Active Member

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    Thanks Peter
    it also appears that only tenant can apply for rental relief (however money will be paid directly to LL)
    so if LL offers reprieve to tenant and offers rent reduction but later on for whatever reason tenant refuses to apply for relief than again the LL will lose out
    right now we don't even know if tenant is eligible but even if they are just to make our life hard they can refuse to apply for relief
    as they are now refusing to provide any evidence of hardship to us at this time
     
  9. Lil Skater

    Lil Skater Well-Known Member Business Member

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    The dollar value or percentage of rent reduction really depends on the tenants AND your situation. For whatever reason I am finding one party or the other believe they’re the only ones hurting at this time..

    You do need to negotiate before the tenant can apply for the rent relief grant (less than $5k savings, income <$100k, and the rent must be over 30% of their income after the reduction). Max is up to $2k, not guaranteed.

    If you negotiate you can also look into the land tax relief which is 25% if you pay land tax.

    The rent relief grant is NOT a top up, but a contribution to the reduced rent. For example:

    Rent per month usually $5,000 and reduced to $2,500. Landlord directly receives grant of $2,000 and the tenant needs to pay $500 for that month.

    Any reduction you offer above concessions you receive (ie. land tax reduction) comes out of your pocket regardless of the grant.

    I would tackle it this way.
    1. Look at what concessions you can receive
    2. Tell the tenant you’re willing to look at the situation, however they must supply XYZ.
    3. If the tenant provides this, then look at a reduction that is affordable and reasonable to both parties.
    4. If the tenant doesn’t supply it, they get nothing. You can apply for mediation, or if they willingly withhold any rent you can apply direct to VCAT to potentially get possession of the property.
    End of the day people cannot expect to get something without coming to the party. The genuine cases are generally quite happy to provide what we ask in a timely manner.

    What they’ve asked for seems excessive. I would look at it from the above and also break down their out of pocket if they can receive the grant. So they may not receive 50%, but if they get the full $2k and their rent each month is usually $2k it means they have effectively received a 50% reduction for 2 months - plus whatever else you can offer.
     
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  10. sam999

    sam999 Active Member

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    Thanks Lil
    I have already instructed the agent that we can look into rent reduction if tenants can supply documentation to support it but so far agent is not having any luck
    other option I gave was to defer the rent for a month and they can pay it in installments over next 7-8 months with regular rent
    rent is around $1900 per month

    legislation expects that tenant will negotiate in good faith and provide their details so LL can understand if they are eligible for govt grant or not however this does not seem to be the case here
     
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  11. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Put uo data, may consider a reduction, otherwise bugger off with the ambit claim ??

    ta
    rolf
     
  12. Traveller99

    Traveller99 Well-Known Member

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    My PM has recently motioned a claim to Consumer Affairs to begin such a process. My situation is similar to yours but layered with additional complexities.

    The important first step has been to engage in a good faith attempt to rectify the situation, as landlord insurance companies wish to see this if you end up being able to claim arrears.

    Best of luck.
     
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  13. AlphabetSoup

    AlphabetSoup Active Member

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    Another thing to consider is whether your tenant is being cagey about their details because they were paid in cash? Perhaps they are struggling to prove their income due to lack of records?

    I know of one case in Melbourne where the landlord went through with a 50% reduction (after a lot of resistance at first). They had two tenants living in a sharehouse arrangement. One tenant lost their job (they were an international student), the other was still working (a domestic student, no cut to their hours). Tenants were on a month to month lease, but I suppose the landlord realised the alternative was an empty apartment given the suburb was very popular with working holiday makers/temporary visa holders.

    This was all negotiated without the involvement of CAV.
     
  14. skater

    skater Well-Known Member

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    So, the rent is just under $500pw before any reductions? I have a heap of properties that are rented by welfare recipients (before covid hit) that were paying close to $400pw. Bearing in mind that the new Jobseeker is more than the previous unemployment figure, in many cases their rent will still be less than 30% of their income depending on how many other benefits they are eligible for.

    Make sure that your PM is sending out all the relevant notices, just as they normally would. Have your PM book them in for a VCAT hearing & mediation. I'm not saying that your tenant is playing the system (although it looks like it's the case) but there are a few that are, and the only way that this will be fair on you is to get all the details, which it sounds like will only happen at mediation.
     
  15. MTR

    MTR Material Girl Premium Member

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    good advice
     
  16. thesuperman

    thesuperman Well-Known Member

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    Tell the tenant to go f*** themselves (in a nice way) since they aren't gonna give you financial proof or proof that they lost their job. They are just trying to get cheap rent without any financial hardship.
    Since the tenant is already behind, if you reduce rent then I believe your landlord's insurance policy won't cover you for them not paying rent.
     
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  17. sam999

    sam999 Active Member

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    agency should have checked the financial and job stuff when tenant moved in which was just two months ago. I have asked agency to provide me additional documentation which tenant submitted at time of application

    Sorry I got it wrong, rent is $1550 per month, it is under $400 per week (without any reductions)

    If someone is genuinely in trouble than they should have no qualm in providing any details which can help their case
    apparently the renters are also unwilling to discus matter with the PM and want to keep all communication on email
     
  18. wylie

    wylie Moderator Staff Member

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    Agree... and having it all on email is a good thing if you need to show the to a mediator. I think it is better than a call.
     
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  19. skater

    skater Well-Known Member

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    Well, that sheds a whole new light on it, doesn't it? You keep saying 'they', so assume there's a couple. I'd be playing hardball right back. Get your PM on board. Make sure they are doing the right thing as far as the notices go, etc, and refuse to give in. This needs to go to mediation.

    If your PM can't, or won't do what you expect of them, it's time for a change. Not sure where you are in VIC, but there's some great ones on this forum. I'd start with @Lil Skater (disclaimer, she's my daughter) as I know she's great, & if it's in an area she doesn't service, I know she's got lots of great contacts and may be able to give you the name of someone good in your area.
     
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  20. Lil Skater

    Lil Skater Well-Known Member Business Member

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    @sam999 if they moved in 2 months ago and they're already a month (almost) in arrears - they're probably having you and the PM on. At a guess, they've done this before. What jobs do/did they do?

    The rent is $355 per week, unless they are temporary visa holders (or some of the poor people that have fallen through the cracks) and receiving no Government assistance, that rate should be perfectly affordable.

    If it's a couple receiving JobSeekers on max payments, 30% income is $350pw - but they can probably receive rent assistance above this which would bring it under the 30% threshold. JobKeeper is a little more if they are receiving this instead, but it's still affordable.

    A single would have trouble if they had no further income - but if this were the case their communication needs to be open and honest so you can all work together.

    The way we've negotiated for owners that have been unable to offer substantial reductions, but we know the tenants should be eligible based on the information received is to break it down. A lot of tenants are seeing that the assistance is a once off and not the bigger picture.

    For example, below is what was negotiated with a tenant that asked for 50%. The owner has also been affected and the total land tax saving they could receive was just $172. But once you consider the grant, the reduction is quite considerable:
    • Monthly rent = $2,585 less $172
    • Rent due May $2,413
    • If full $2k grant received out of pocket for May $413
    • Savings over 3 months effectively $724 per month (or rounded up roughly 30%) if full grant is received
    Obviously not all tenants are going to receive the full $2k and we're including other grants in emails for business owners and students where further help is available. But it relies on all parties to be open and forthcoming with the information, if one party is not willing you need to go through mediation with CAV and then VCAT.
     
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