The Australian Government, in conjunction with the State Governments, is considering new measures to protect tenants who are unable to pay their rent due to COVID-19.
New legislation is set to be introduced that will protect individuals for up to six months during the crisis.
Prime Minster Scott Morrison stated in a press conference on Friday afternoon the States have agreed to work on a plan to identify how relief can be provided for both commercial and residential tenants – but it will be on a state by state basis.
“That work will be done by states and territories as it is a state and territory matter, and that work will be led by Western Australia, together with New South Wales, working with all the other states and territories to bring back some model rules that can be applied in hardship cases,” Mr Morrison said.
The REIQ believe this equates to asking over 2 million Australians to cover $9,516 each (on average) of unpaid rent over the next six months.
According to their calculations for the average property investor earning less than $80,000 per annum, this would represent over 30 per cent of their annual take-home pay during those six months.
These are residential landlords, ‘mum and dad’ investors who the REIQ believes are equally at risk of losing their jobs as a result of the COVID-19 pandemic.
Mr Morrison acknowledged in his statement this would mean something for landlords as well but it was currently being worked through.
“All Australians are going to be making sacrifices obviously in the months ahead, and everyone does have that role to play, and that will include landlords at the end of the day,” Mr Morrison said.
CEO of the REIQ, Antonia Mercorella explained the rise in property prices over the last few years had not been matched by wage increases.
“…removing mum and dad investors’ rental income for any period must correspond with the subsequent waiver of their mortgage obligations for that same period for any protective measures to be sustainable,” Ms Mercorella said.
REIWA president Damian Collins agreed people’s homes and jobs need to be protected during the crisis.
“It’s your mum and dad investors and their tenants that will feel the brunt if they can no longer afford to pay their mortgages,” Mr Collins stated.
“Most landlords are already willing to help tenants who find themselves in financial stress because of COVID-19, but safeguards are needed to ensure they themselves don’t fall into hardship as a result.”
REIA president Adrian Kelly said he would be asking banks to postpone mortgage repayments.
“We know many of our tenants live from pay cheque to pay cheque, and this is particularly the case at the lower end of the market.
“With this in mind, I am in the process of writing to the larger banks and financial instutions to make them aware of these imminent situations.”
In addition, the REIWA is also urging the government to introduce a 75 per cent stamp duty reduction for six months on all properties to encourage transactions to help those who need to sell and keep small business alive.
“A short-term stamp duty concession or rebate of 75 per cent will make buying property much more attractive, safeguarding thousands of jobs including mortgage brokers, removalists, settlement agents and tradespeople.
“There is a strong risk that transactions may drop significantly which will put thousands of people out of work. A short-term relief package will encourage people to continue buying and selling and keep small business going.
“In addition, for those people who will need to sell their homes, they will need a buyer at the other end. Without this short-term incentive there may not be many buyers in the market, which could be a double blow to those who need to sell,” Mr Collins said.
In other places around the world, for example New York, Mortgage payments and foreclosures have already been suspended for a 90-day period in light of the coronavirus pandemic.
The UK legislated protection for renters last week.