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Should landlords cancel COVID tenant rental debts?

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1 minute read

Should landlords cancel COVID tenant rental debts?

by Sam O Connor 02 December 2020 1 minute read

Nearly 1 million tenants across Australia could be left homeless if rental debt is not forgotten when the moratorium on evictions lifts, new research has found.

Should landlords cancel COVID tenant rental debts?
December 02, 2020

Advocacy group Better Renting has found that between 324,000 to 973,000 renters could be kicked out of their homes because of rental debt or because they couldn’t get their landlord to decrease costs during the pandemic.

Director Joel Dignam said that in order to save renters from financial ruin or homelessness when the eviction moratorium starts to expire, states and territory governments should cancel all rental debts.

“Governments have a responsibility to support indebted renters to stay in their homes. To achieve this, governments should cancel all rental debt. They can do this by buying debt from landlords at a reduced rate and then declining to claim that debt from renters,” Mr Dignam said.

The report explained that the COVID-19 recession has not hit Australians equally, with low-income people likely to make up renters who are now facing eviction.

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“Renters were already worse off before the pandemic, and COVID-19 hit this group harder.”

“Prior to the pandemic, renters were more likely to be in insecure employment, with lower household incomes and less financial resilience,” Mr Dignam said.

“Compounding this, hard-hit industries such as retail and hospitality had an above-average number of ‘We owe them three and half thousand dollars and now we need a reference from them to find a new place to live’.” 

Industry experts disagree

The Real Estate Institute of Victoria believes a call by tenant advocates to cancel all rental debt sends the wrong message and could encourage tenants to stop paying their contracted rent in the expectation that the taxpayer will pick up the tab.

The REIV pointed to the 57,000 Victorians who faced hardships and were able to get a reduced rental agreement through working with their landlord.

“Any suggestion that landlords will simply kick them out for COVID-related rental debt is both incorrect and inflammatory,” REIV president Leah Calnan said.

She said the roadmap out of the rental moratorium remains unclear and has urged the government to announce a clear plan prior to December.

Facing an increase in evictions, the Victorian government is proposing to introduce over 120 changes to the Residential Tenancies Act the day after the moratorium ends. 

The REIV argued that this will put substantial pressure on tenants, landlords and property managers to manage the cessation of the moratorium as well as the transition to a raft of new rules and procedures, all within a 24-hour period.

“The pandemic hasn’t been selective; it has hit everyone – tenants, landlords and property managers. It is irresponsible to suggest that all rental debt should be wiped as it may be another person’s only source of income,” Ms Calnan stated. 

“It is vitally important that property managers and landlords are given sufficient advance notice of the detail behind the changes to the Residential Tenancies Act. The landlord investors are critical to keep the Victorian property market stable.”

Should landlords cancel COVID tenant rental debts?
Should landlords cancel COVID tenant rental debts?
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Sam O Connor

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