While the vast majority of tenants do the right thing the Real Estate Institute of Victoria is seeing increasing evidence that some tenants are rorting the system put in place to protect them.
The first six months of the moratorium against evictions and rent increases has seen the vast majority of reduced rent agreements reached amicably between landlords and tenants.
In addition, almost 2000 agreements have been formalised through mediation at the Dispute Resolution Centre Victoria.
However, there is growing evidence that some tenants are using the government’s moratorium to set their own rules and take undue advantage of the measures.
Even when the dispute is taken to VCAT there is often no outcome for the landlord, with the tenant effectively living rent-free until the end of the moratorium.
The longer the moratorium continues the more tenants will take advantage of the biased system and the harder it will be for property owners to protect their asset.
Any extension of the moratorium must be accompanied by changes to the currently biased system.
Gil King CEO of the REIV explained:
“Property owners who have worked hard to save and invest to provide for the future of their families are not being protected by the moratorium.”
“The moratorium was necessary, but it should never have resulted in tenants being able to not pay rent just because they know they can’t be evicted. The longer this continues, the worse it will be.”
Here is a small sample of typical stories:
- A tenant who is not suffering Covid-19 financial stress is currently more than $7,000 in arrears. The landlord is in dire financial difficulty. VCAT order for the payment of the arrears has been made but the landlord cannot act till the end of the moratorium which is now in January 2021.
- The tenant was issued with a notice to vacate before Covid-19 hit because the owner wanted to move into the property. The tenant does not communicate or pay rent. VCAT issued a warrant to evict the tenant, but the police won’t execute it. The property owner must live elsewhere until this is resolved while paying for two properties.
- A commercial tenant has not paid any rent for the small shop since March and is now $30,000 in arrears. The property owner is being chased for council rates and body corporate fees of more than $15,000.
- A tenant who has not been impacted by Covid-19 and has simply embarked on a ‘rent strike’ now owes more than $22,000 in rent arrears. VCAT issued a warrant in March and then withdrew it because of the moratorium. The case has been back to VCAT three times and keeps getting adjourned because the tenant makes promises that are not kept. The matter was last listed in June and is still unresolved.
- A tenant who earns over $180K per annum has not paid rent since the announcement of the moratorium. The tenant requested a 50% rent reduction which was refused. The property owner then applied through CAV and DSCV and ultimately ended up at VCAT. The tenant has not attended VCAT on various medical grounds and finally provided documents that he had earned more than $50,000 in three months. VCAT has indicated it will grant a rent reduction.
Leah Calnan, REIV President said:
“The moratorium was supposed to support those in financial hardship as a result of Covid-19, not create greater than necessary financial hardship for property owners.”
The clear bias in the system of dispute resolution and the negotiation of rent relief makes the system unfair towards people who are watching their life savings deteriorate as they bear the burden of the government’s support for tenants.”
The REIV does not dispute that many tenants are doing it hard, and we know this because our Members serve both property owners and tenants. What concerns the REIV is the lack of due process, oversight, and enforcement to ensure that no one takes undue advantage of the situation.
And Richard Simpson, REIV Past President and Real Estate Institute of Australia Director explained:
“The lop-sided Government support for tenants at the expense of the supply side has already pushed a large number of property owners further and further into debt.”
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