Data in 2020 show that a third of households in Australia are renting from private landlords. Tenants are usually younger than landlords, with almost two-thirds of tenant household heads below the age of 35. Tenants usually have lower incomes than homeowners. They spend a larger percentage of their income on rent compared to what the homeowners spend on their mortgage.
The pandemic caused many job losses that affected the incomes of many tenants. To help, the Australian Capital Territory (ACT) put in place a six-month moratorium on the eviction of tenants affected by Covid-19 even if they were unable to pay rent from April 22 to October 22, 2020. At the end of the moratorium, the ACT declared a transition period from October 23, 2020 to June 30, 2021.
The Transition Period
The transition period is a grace period to allow Covid-19-affected tenants a longer time to pay their outstanding amounts before they are evicted. Landlords can ask for proof of Covid-19 impacts such as a letter or email from the employer proving job termination or a reduction in work hours. Proof of eligibility for Jobseeker or Job Keeper payment, or proof of previous and current income in payroll statements or a bank statement. Tenants who are under informal work arrangements may also make a statutory declaration if they cannot provide evidence of job loss.
The landlord can reduce rent up to June 30, 2021 to help the tenant meet obligations. This reduction can be extended further if the landlord agrees. A landlord who reduces rent by 25 percent or more for up to six months will be given a land tax rebate amounting to 50 percent of the reduction for a maximum of $1,300 for every tax quarter. The basis for the 25 percent reduction is rent as of March 1, 2020 and the rebate is effective from April 1, 2020 to June 30, 2021.
During the transition period, the tenant must pay rent as it falls due, and arrears must be paid up by June 30, 2021. If the tenant does not pay rent during the transition period, the landlord can apply for a termination of the contract and possession order for the property with the ACT Civil and Administrative Tribunal (ACAT).
If the tenant qualifies as a Covid-19-impacted household, the ACAT will first issue a payment order requiring the tenant to pay rent as it falls due including a specific amount to pay in installments for the arrears. The landlord can apply again to ACAT for eviction, if the tenant does not comply with this.
If a Covid-19-impacted tenant opts to end the tenancy earlier than the agreement, the landlord cannot charge a break-lease fee. The tenant will still owe the landlord any rent arrears, though. This benefit for Covid-19-affected tenants is only up to June 30, 2021. After that date, any early terminations will be charged a break-lease fee.
The landlord cannot publish a Covid-19-impacted tenant’s breach of tenancy agreement regarding failure to pay rent in a residential tenancy database. This prohibition stays even after the end of the moratorium period.
Regular Landlord Duties
Beyond matters regarding the transition, all other landlord duties and responsibilities remain. One other change, however, is that effective April 6, 2020, the amendments to the Residential Tenancies Act 1997 reduced the amount of advance rent a landlord can charge from one month to two weeks.
In general, throughout Australia, landlords must ensure that the house is vacant, safe, and clean, with plumbing, electricity, gas, heating, ventilation, and air conditioning (HVAC) installations in good working condition when the tenant moves in. The landlord must maintain the structure, interior, and exterior of the house, and respond promptly to requests for maintenance and repairs. If an emergency repair is necessary and the landlord is not able to respond, the tenant has the right to have the repair done for up to $1,000 and charge the landlord for it.
Many landlords cut costs by doing some of the simpler maintenance and repair tasks themselves. DIY projects can include routine changing of lightbulbs, faucets, or light carpentry work. It is more cost-effective, though, for a landlord to shift to more modern hacks in property management such as hiring a residential building maintenance service. In the face of the pandemic, this can also keep landlords safe from constant exposure.
Good News for 2021
ACT landlords can look forward to the rest of the year. In May 2021, the top 10 suburbs in Canberra with the highest rental yield compared to cost are Belconnen, Holt, Ngunnawal, Macgregor, Bonner, Lyons, Phillip, Curtin, Franklin, and Gungahlin. The highest rental yield is 5.73 percent in Belconnen while the highest median rent is $560 in Bonner.
Simon Pressley, head of research at Propertyology, states that outside Sydney and Melbourne, property managers often receive numerous rental applications for the same house, with tenants willing to pay $50 to $70 more per week compared to the median rent. Prospects are looking good for ACT landlords.
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