Thursday 26 March 2020
The National Cabinet discussed new measures on the evening of March 25 protecting renters from eviction if they face financial problems due to COVID-19.
While more banks have been following the lead of the big four and offering mortgage repayment holidays and other banking crisis relief in the wake of Coronavirus, renters have, until now, been left in a state of uncertainty.
This new decision will allow tenants with commercial or residential leases to maintain their occupancy if they can identify the virus as the cause of their financial hardship and issues related to their rental situation. This will be some very welcome news for those who’ve lost their jobs and small business owners who have been forced to close their doors temporarily due to more stringent social distancing protocols put in place by the federal government earlier this week.
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But with landlords who have mortgages to repay, tenants who want to avoid looming future debt, and real estate workers with employment secured to the success of these living arrangements, the situation becomes more complex.
“The logical way to do it is to give subsidies to the renters so money can keep flowing back to the landlords who can then carry on paying their mortgage,” Mozo property expert Steve Jovcevski says.
Jovcevski notes that, with students leaving share houses to move back home to save money, or not arriving for university terms from overseas, there are more rentals to fill and fewer prospective tenants, resulting in a rental price dip.
“You’ll find that until the borders reopen, the rental market will be affected and prices will decrease temporarily. But if banks eventually do call in loans, impacted investment properties used as rentals may no longer be available for tenants because banks have sold them off. Then there’ll be a huge surge in rental demand and a spike in prices as everything opens back up again. This could cause a rental crisis.”
The national announcement on Wednesday night didn’t outline a plan for rent freezes or a government bailout to cover rent-related losses, as tenancy laws are in the hands of the states and territories, and more information is expected to become public on Friday. This will also mark when the support packages for small businesses and residents will be made concrete.
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