Tenants struggling to get coronavirus rent relief, research reveals
With weeks until the expiry of a nationwide ban on rental evictions, new research reveals just how difficult it has been for tenants to secure any rental relief from their landlords.
The Portraits of a Pandemic report from Tenants Victoria found negotiating to reduce rent was difficult and stressful, particularly against the backdrop of broader uncertainty over people’s work and finances.
Negotiated reductions were “hard won” and generally for just three months or less, the report found.
Many tenants were forced to settle for a deferral of rent — a future debt — instead of a reduction.
A large number of renters who participated in the survey reported they expected their tenancies would be at risk as soon as the protection against eviction for arrears related to COVID-19 finished at the end of September.
Intensive care unit nurse Carolyn Brownie was unable to negotiate any rent reduction on her Melbourne flat after her income crashed in April when the number of her shifts fell in the early days of the pandemic.
Unable to access support programs like JobKeeper or JobSeeker, she began three months of fruitless correspondence with her real estate agent over her financial hardship. It garnered no result, apart from the suggestion she attempt to find a flatmate to share the rent.
“I was told you need to get someone to move in with you,” she said.
“I’m the most high-risk COVID housemate, the most high-risk date around!”
It took the involvement of Consumer Affairs Victoria to find a resolution.
The watchdog contacted the landlord, who would not agree to a reduction, or even for Ms Brownie to go into arrears. This enabled the rental contract to be terminated and her to move out before the end of the term.
“This doesn’t sound very fair to the landlord,” the real estate agent told her when the consumer body’s decision was handed down.
With stage 4 restrictions — currently some of the strictest quarantine conditions in the world — in place in Melbourne, Ms Brownie is unable to search for a new property.
“I’d be homeless except for having a girlfriend who’s up in northern New South Wales — and not coming back for a while, clearly — with an empty apartment I could move into,” Ms Brownie said.
Renter-landlord ‘power imbalance’
Landlords gave the survey a raft of reasons for refusing to reduce rents, but the most common — more than a third — was “no reason given”, incensing the renters’ lobby group.
“It’s an extraordinary statement of the power imbalance that exists between tenants, real estate agents and landlords,” Tenants Victoria chief executive Jennifer Beveridge said.
“And it’s a blatant disregard of the clear directive given by the Premier and Prime Minister for ‘good faith’ negotiations to be had between all parties.”
National Cabinet asked renters to negotiate with landlords for a rent reduction if they had lost income due to the impact of coronavirus.
But legislation enacting a broad, but not complete, ban on rental evictions was passed by separate states and territories.
Some allowed wide, “no reason required” clauses that continued to permit evictions. Others resulted in most reductions really being deferrals, creating a growing issue with tenants accruing massive debts.
“Deferral means the problem hasn’t been averted, it’s just been delayed, and it’s snowballing into a bigger problem,” Ms Beveridge said.
“People in Victoria aren’t returning to normal work in September.
“People are affected now who have never had to ask for help before. They’ve dipped into their super, they’re coming up to September and they’ve got nothing left.”
The second most common reason given to tenants for refusing a rental reduction (22 per cent) was “landlord said no/needed income/not eligible”, which points to the aligned nature of the problem.
Payments on about half a million mortgages — about one in 10 of all home loans in the nation — worth more than $190 billion, were frozen by the end of May.
Add in small business, car and other loans, and the number on hold rises to around 900,000 agreements worth about $266 billion from Australia’s 20 biggest banks and mutuals.
But it is a payment freeze — and does not pause interest accruing on the debts. In most cases, the loans are being extended with extra interest loaded onto the total owed.
With a cliff of problems looming in September, Australian Banking Association chief executive Anna Bligh last month announced a further four-month extension to loan deferrals for those still in need, subject to negotiation between customers and institutions.
Tough road ahead
With the rental eviction ban in different states set to expire at the end of September, each jurisdiction will need to deal with the problem.
It comes as rents start to fall steeply in some regions hardest hit by the virus, and associated lockdowns and border closures.
With many young people returning home to their parents due to their income falling, and many international temporary residents also returning home, the number of vacant rental properties has surged in some areas.
But there are multiple housing markets in Australia, and different areas within the same big cities can see vastly disparate results.
CoreLogic’s head of research, Eliza Owen, has seen a surge of rental listings across Australia’s inner-city markets, particularly Melbourne and Sydney.
“This is because the majority of new migrants to Australia are renters, at least initially,” she wrote.
“Other factors contributing to the heightened level of rent listings include a recent … surge in high-rise construction activity.”
Meanwhile, demand has been hit because industry sectors in which many of the workers tend to rent, such as hospitality, accommodation, tourism, the arts and recreation, have been slammed by the economic impact of the virus.
With more large apartment projects approved and built during the last boom and set to hit the market soon, investors may choose to cut their losses and sell, which could lead to falling prices for buyers — and renters.
The looming situation also puts a focus on the relationships and responsibilities of real estate agents as conduits between renters and landlords.
Ms Brownie sees the agent’s position as too conflicted to be of any use.
“Our real estate agent wasn’t a neutral person — she acted like a judge,” she said.
“The real estate agent more than once tried to stop me even bringing it to the landlords … she told me no multiple times and accused me of lying about my financial situation, even when presented with bank statements.”
Few people would have had the time and persistence to get the result she did, Ms Brownie said.
“Good luck to people. But I have balls and brains to do it, and I can get things done,” she said.
“It’s just me — I can research the Residential Tenancies Act, I’ve got the time. I’m not a mum, I don’t have kids to look after, I don’t have things going on.”