Both commercial and residential landlords will be banned from evicting tenants who can’t meet their commitments because of financial stress caused by the coronavirus economic downturn for the next six months. 
This is part of what Prime Minister Scott Morrison calls the “hibernation approach” as the government tries to build bridges for us to get to the other side of this global pandemic.
While this brings up lots of questions, unfortunately, there is no rule book as we are in uncharted territory and details of the proposed assistance schemes for both tenants or landlords have yet to be released.
Tenants who are not significantly affected by coronavirus are expected to honour their leases and rental agreements, but at Metropole we have already seen many tenants request rental relief because of job “uncertainty” rather than because they’ve lost their jobs.
Clearly many tenants are worried that they won’t be able to pay their rent, but on the other side of the coin, many landlords, who tend to be ordinary mum and dad property investors, are concerned they won’t be able to keep up their mortgage payments.
Some of these investors have been hit with a double whammy – they’ve lost their jobs and now their rental income is threatened.
While these property investors are generally compassionate and don’t want to evict families in hardship, they are asking us questions like:
“What if my tenant doesn’t pay me for six months, and I can’t evict them? Then at the end of the six months’ moratorium they leave and don’t catch up the rent, yet I still have to pay for my monthly mortgage?”
Their concerns are understandable and with unemployment levels expected to hit double digit figures very soon, the situation will only escalate.
But my understanding of this Moratorium is that this is a postponement of eviction and requirement to pay rent, not that rent will not be required to be repaid.
What should a tenant do?
Until the government’s relief packages are made clear, the first step is to have open communication with your property manager or landlord.
Talk to them and explain your situation, even if your income has reduced but not disappeared and put an action plan into place.
Until details of the State Governments’ relief packages for tenants are announced, speak with your bank as all our banks have agreed to help get Australians through the current economic crisis.
What should landlords do?
Most property investors will be hit by the Corona Crunch at some time as unemployment levels rise, but this is the time for understanding and compassion - nobody wins by making things difficult for a tenant who is in financial trouble. 
This is a time for leniency. It’s important to understand the tenants don’t want to be in rental arrears, but if paying their rent leaves them without money for food or medical attention, the decision most tenants will make is obvious.
Fortunately, many investors will be able to fall back on their landlord’s insurance to cover some of their losses, but how the landlord deals with the situation may affect if they can claim insurance.
According to EBM Rentcover Insurance if landlords want to put measures in place to support a tenant through this difficult time, that is up to them.
However, this is how a couple of scenarios may impact insurance:
- Reducing rent: if a landlord agrees to reduce rent, they cannot claim for the difference in payments.
- Putting rent on hold: again, if a landlord wants to suspend rent for a couple of weeks while the tenant gets back on their feet, this would not be covered as it is a mutual agreement and not an insured event.
- Not issuing late notices: if this sort of leniency is given to the tenant, it will only be an issue if it comes to a claim relating to termination.
Until details of the tenant and landlord relief packages are made available, our advice is for landlords to put a payment plan in place with any tenants who are genuinely suffering financial difficulties. 
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For example, you could offer them an arrangement where they pay less rent (maybe half) for the next few months, but agree to catch up their rental payments through increased rental in 3 or 4 months once they secure employment.
Property investors should also speak to their bank about getting a mortgage holiday – either pausing or reducing their monthly repayments.
But there's lot's of confusion.
Understandably with the swift progress of coronavirus, the government is announcing legislation without it being fully enacted and often without full details being finalised.
Unfortunately this is creating some confusion for tenants, property managers and property investors.
Prime Minister Scott Morrison explained that the ban on evictions will apply to tenants who are not able to meet their obligations due to financial distress as a result of the coronavirus crisis.
But what about matters in progress?
What happens to tenants who have already fallen behind in their rentals, or tenants who have damaged their rental properties?
Does this mean these owners are going to have to look the other way?
Now it's important to be sympathetic to people in real financial problems, but the recently announced financial rescue package should mean most people who lose their jobs will be given reasonable entitlements through Centrelink, while others who were likely to lose their job will now keep it, due to payments made to their employers to keep businesses alive.
But for property investors it's not just a matter of pressing pause on mortgage repayments to set and forget for six months.
Some will suffer financial hardship even though the banks will assist them by putting their mortgage payments on hold, but rmeber this is just a postponement of the payments. The interest will still need to be paid.
The view of the REIA.
President of the REIA, Adrian Kelly while being supportive of the Government and its efforts, is disappointed with the simplistic approach of the Prime Minister’s message which ignores the tenancy
arrangement and thus raises more questions than it answers.
Here's what he had to say:
“Real estate agents are the middle persons who facilitate the agreement between landlords and tenants and manage it as well as the property.
“There are some 70,000 property managers, principals, real estate agents and representatives across Australia. Tenants don’t negotiate with landlords.
“Banks have already indicated that they are offering customers the option to defer home loan repayments for up to six months.
“We need to address the support of agents so that what the Prime Minister wants, in terms of landlords and tenants - finding a solution to get through the crisis, can be achieved.
“Estate agents will work very hard to facilitate the role between landlord and tenant, and to do this they need income.”
“I note that National Cabinet is still to consider details. Hopefully these will come so that the Prime Minister’s objectives can be met,”
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