COVID-19 – Residential Tenancies

Contributed by Mahoneys, 27 April 2020

COVID-19 – Residential Tenancies

We finally have some certainty in relation to the amended legislation for residential tenancies. Late on Wednesday night (22nd April 2020) the Queensland parliament passed the Covid-19 Emergency Response Bill 2020, which gives to the relevant Ministers the ability to recommend that regulations be made. Late on Friday afternoon (24th April 2020), the Residential Tenancies and Rooming Accommodation (Covid-19 Emergency Response) Regulation 2020 was notified and came into effect.

Timing
For the most part, the regulations will take effect from 24th April 2020, however there are a couple of sections that are retrospective and take effect from 29th March 2020. These relate to the moratorium on evictions. The new regulations will expire on 31 December 2020.

Moratorium on evictions
From 29th March 2020, until 29 September 2020 (or earlier, in the event that the Covid-19 emergency ends earlier) a tenant cannot be evicted for failure to pay rent if that failure relates to the tenant suffering excessive hardship because of Covid-19. There is a penalty attaching to this section of $6,650.00 (however that will not apply to any actions taken between 29 March 2020 and 24 April 2020).

It is important to realise that this is not a get out of jail free card for tenants. Tenants can still be evicted for doing the wrong thing and on other grounds.

Excessive Hardship because of Covid-19
The good news about the new regulations is that they provide very clear guidelines around what is excessive hardship because of the Covid-19 emergency (“excessive hardship”). That is where the person:
• (or someone they care for) suffers from COVID-19;
• is subject to a quarantine direction;
• has had their place of employment closed or restricted;
• is self-isolating for certain reasons;
• is prevented from working or returning home due to a restriction on travel; or
• is prevented from leaving or returning to Australia due to the COVID-19 emergency;

AND that person suffers a loss of income of 25% or more or the rent payable is 30% or more of the person’s income. There are qualifications in the event that there is more than one tenant, in which case the reduction of income (or the percentage that rent bears to income) needs to take into consideration the combined income of all tenants or residents.

This will need to be substantiated by providing the same financial information that a tenant would normally provide at the start of a tenancy.

A tenant has an obligation, as soon as reasonably practicable, to inform the landlord of any change in circumstances where they are no longer suffering from excessive hardship (if they do not, the penalty is $2,660.00).

In working out a tenant’s income, any financial assistance being received needs to be included (for example, JobKeeper, JobSeeker or Rent Assistance). We are hopeful that the tenants of many of our clients will have access to some financial assistance to assist their income.

Extending Agreements
In cases where a residential tenancy agreement was due to end on or before 29 September 2020 and the tenant is suffering excessive hardship, the landlord must offer to the tenant an extension of the term to 30 September 2020 (or any earlier date requested by the tenant).

Rent Reductions and Deferrals
There is no prescription in relation to rent reductions or deferrals, rather the parties are free to enter into their own agreement to either reduce the rent for a stated period or enter into a payment plan for unpaid rent. This will be completed on the new form 18d – variation agreement.

The Government has continued with their request that the parties work together in relation to ascertaining a new temporary and sensible rent amount. We understand that guidelines are being developed to assist any parties struggling to reach an agreement (the regulations allow the Minister to make further guidelines to assist with the application of the regulations).
In the event that the parties simply cannot reach an agreement, there is now a process for conciliation. If that does not work, then an application to the tribunal for an order can be made, and the tribunal will be able to make any order that it considers appropriate.

We understand that the RTA has strengthened its dispute resolution capacity to accommodate this conciliation, and that applications for dispute resolution relating to COVID-19 will be prioritised by the RTA. There is a new COVID-19 dispute resolution request form (form 16a) and an online portal for uploading supporting documentation.

We strongly recommend to clients that they seek to resolve the issues themselves rather than handing the decision making power over to the tribunal.

Rent Reductions and Bonds
Our clients will take comfort in the new clarity that where the rent is temporarily reduced, it is not necessary to reduce the bond (provided it was not more than the maximum amount originally).

Unpaid Rent
The regulations introduce a new show cause notice for rent that is unpaid for at least 7 days. In circumstances where the landlord knows or reasonably ought to know that the tenant is suffering excessive hardship, the landlord is not able to serve the usual notice to remedy breach, but must instead serve a show cause notice (this will need to be in the approved form, which can be found on the RTA website). The purpose of a show cause notice is to allow the tenant to inform the landlord of their excessive hardship, in which case, the landlord has the opportunity to request the tenant to enter into a variation agreement.

Another important section in the regulations is the prohibition of a person listing another person on a tenancy database where the failure to pay rent, or the ending of an agreement happened during the COVID-19 emergency period and was because the person was suffering from excessive hardship or complying with a public health direction (which is declared under the Public Health Act 2005). The penalty attached to a breach of this section is $2,660.00.

Tenant termination of agreements
A tenant is not entitled to apply to a tribunal for a termination order because the tenant would suffer excessive hardship (using the existing provisions in the Residential Tenancies and Rooming Accommodation Act 2008), unless they have first made a dispute resolution request (for conciliation) and have been unable to reach a conciliation agreement. If the tenant does make an application, then it is no longer an urgent application (as it would have otherwise been). Again, the situation is not to be used by tenants as an excuse to get out of their tenancy agreement.

Entry to Premises
A landlord/agent is not able to enter the premises for routine reasons if:
• a person at the premises is subject to quarantine;
• the landlord/agent is subject to quarantine;
• entry would contravene a public heath direction; or
• the tenant refuses entry due to the tenant (or another person staying at the premises) being a vulnerable person.

A vulnerable person is someone who is:
• over 70 years of age;
• over 65 years of age who has an existing health condition or comorbidities;
• an Aboriginal person or Torres Strait Islander over the age of 50 who has an existing health condition or comorbidities;
• an individual whose immune system is compromised.

It is clear from this new section that entry associated with smoke alarm compliance is still allowed, as is emergency entry and where the landlord believes entry is required to protect the premises from imminent or further damage. Again this is not a blanket permission to a tenant to deny entry to the premises. There are also circumstances in which the tenant must allow a virtual inspection or video conference.

Landlord sale of the property/owner occupation
There are sections in the regulations which allow the landlord to give a tenant 2 months’ notice to leave (on the appropriate forms and with the required evidence) in the event that the landlord is selling or preparing the property for sale, OR needs to occupy the property. These sections allow for fixed tenancy agreements to end earlier than they otherwise would. There are penalties for misuse of these sections ($6,650.00).

Moving forward
We now have some clear guidelines surrounding how property managers should assist their owners to deal with their residential tenancies. We are hopeful that the definitions of excessive hardship as a result of COVID-19, may clear up any uncertainties as to when a tenant is entitled to a rent reduction or deferral. It is also a comfort that the Government has not tried to prescribe a one size fits all approach to such matters. From speaking to our clients, we are seeing a very small percentage of rent reductions being requested and are hopeful that with open discussion between the parties, these will be able to be amicably resolved.

It is also important to remember that all tenants not impacted by COVID-19 will continue to operate under usual arrangements.

Hopefully the regulations provide sufficient guidance for our clients to get on with business. We are here to assist with any documents and forms you may need.

As we have said in the past, our industry can survive this, and it is an opportunity to show your worth to both your body corporate and your owners. Take advantage of that opportunity.

As you will appreciate, these insights are general guidance only, they do not cover every section of the regulations and should not be relied on as legal advice.

If any of these issues are affecting your specific business, please contact Mahoneys (Ph: 07 3007 3777) to obtain timely and practical legal advice on the actual issues you are facing.