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Eviction freeze only fixes one side of rental equation

investor-stories
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Eviction freeze only fixes one side of rental equation

by Grace Ormsby 31 March 2020 1 minute read

The government is being urged to implement immediate rental subsidies for tenants bearing the brunt of COVID-19.

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by Grace Ormsby
March 31, 2020

Property researchers at the University of South Australia have made the request following the Prime Minister’s announcement of a six-month eviction moratorium

Peter Koulizos, a property and investment researcher at the university, said that while this is the right move to look after tenants experiencing significant financial hardship, it looks only at one side of the equation.

He highlighted that older Australians, property owners and tenants are all feeling the heat, with one-third of Australians classed as renters.

“So, while the government is trying to support struggling tenants, it’s overlooking the impact on landlords, many of whom need to pay mortgages or rely on rental income as self-funded retirees,” he said.

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“Simply asking landlords and tenants to negotiate individual arrangements to withstand the crisis is not enough,” he considered.

Mr Koulizos has proposed a solution to the issue: “initiate immediate rental assistance for tenants so that landlords do not experience flow-on impacts to their own mortgages or income”.

While banks are responding – offering six-month deferrals in mortgage payments – another of the University of South Australia’s experts considered it still not taking into account the full picture.

Dr Reza Bradrania highlighted that mortgages are still continuing to accrue interest over this time, adding to the overall expense.

He also expressed concern about self-funded retirees being the likely ones to feel the brunt of rental market changes.

“Older investors who have paid off their mortgages and are using rental incomes to live as self-funded retirees are at particular risk right now, as they will not be receiving any of the same supports that old age pensioners will receive.”

He said, “With no rent coming in, they’ll be in a very precarious position.”

Eviction freeze only fixes one side of rental equation
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