Melanie Hearse - 12 Nov, 2020

What does Victoria’s eviction ban extension mean for tenants and landlords?

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The eviction ban in Victoria has extended to March 2021, creating questions for many tenants and landlords alike. The good news is, there is government assistance on offer – here’s what you need to know.

With a State of Emergency and State of Disaster being declared in Victoria to slow the spread of coronavirus, the Victorian Government the moratorium on evictions that has been in place since 29 March 2020, has now been extended until 28 March 2021. The move is backed by rental relief for eligible tenants, a suspension of any rent increases, and a free dispute resolution process available for tenants and landlords.

Under the laws, those suffering financial hardship due to the coronavirus pandemic are now protected from eviction and can negotiate a rent reduction with their landlord. These laws apply to tenants and sub-tenants in residential properties, rooming house, social housing, under a site agreement at a caravan park and/ or specialist disability accommodation.

The changes in law are not only related to evictions – they have also changed to allow more flexibility in ending a lease early should a tenant find themselves in financial hardship or apply for a rent reduction.

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The issues

With COVID-19 shutdowns seeing an increase in unemployment, reduction in working hours and therefore income, or people taking up temporary work in a field that pays less to make ends meet, the rental market was understandably hit hard. Tenants finding themselves struggling to make the rent could in turn have a knock-on effect to landlords relying on the rental income to make mortgage repayments.

Investment properties with a mortgage attached to them could see landlords having to come up with the shortfall themselves – or discuss with their lender an appropriate plan forward. With the ban in place, landlords could be looking at reduced rental incomes, deferred payments or payment plans to negotiate and stay on top of until next year.

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Rent reductions to the rescue?

Negotiating a rent reduction may allow some tenants to pay some of their rent payments.

Where tenants have been financially impacted by COVID-19, Consumer Affairs Victoria (CAV) is encouraging landlords, agents and tenants to try to reach an arrangement, put it in writing, then register it with them – they have some handy resources available on their website to help both parties work out a fair reduction, including information on what paperwork tenants will likely need to present.

If you’re a tenant requiring a rent reduction, CAV says you’ll need to pre-prepare information to help negotiate with your landlord, including the amount of rent you can afford. You can do this using:

  • What income you will have from your employer and through any government financial support, and how long this income will last.
  • Your savings
  • Your essential expenses; think food, clothing, medical, utilities, phone and Internet, education, or vehicle expenses.

There is no pre-determined rate or amount that is required for you to pay, and as guide, CAV says paying more than 30% of your gross income would be considered as rental hardship.

They also caution rental reductions and rental deferrals are not the same, and if your landlord asks you to defer payments to a later date, you are able to decline if it does not suit your financial situation.

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I’m a landlord and I have a mortgage to pay, what can I do if my tenant can’t pay rent?

While you cannot legally evict a tenant who cannot afford to pay rent and you are legally obligated to work with good faith should your tenant request a rent reduction due to COVID-19 related changes in their financial circumstances, the Victorian Government has taken steps to help landlords too. If a tenant comes to you or your agent, you have the right to request supporting evidence, such as a notice of employment termination and evidence about their Centrelink payments.

Rental relief for tenants

The Victorian Government has recently announced rent relief grants for Victorians experiencing rental hardship as a result of the coronavirus (COVID-19) crisis in the form of a one off grant payments up to $3,000 (up from $2,000.)

To be eligible, you must meet the following criteria:

  • You have registered a reduced rental agreement with Consumer Affairs Victoria (deferral of rent is not considered a rent reduction.) If you have been unsuccessful in negotiating a rent reduction, you will need to file a dispute through CAV.
  • Your household income must be less than $1,903 per week,
  • You have less than $10,000 in savings
  • You are paying at least 30 per cent of your income in rent.

There are no citizenship or permanent residency requirements for applicants. Applicants that may be eligible include casual workers on holiday and working visas, international students, skilled visa holders, seasonal workers, New Zealand citizens and all refugee and temporary protection visa holders.

If successful, the grant is paid directly to your agent or landlord to contribute towards your rental payments.

If you’ve previously applied before the maximum allowable savings increased from $5,000 to $10, 000 or when the maximum payment was $2,000, your application will automatically be reassessed. Grant applications can be lodged up until 28 March 2021.

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So I cannot evict my tenant under any circumstance?

While COVID-19 impacted financial status covers tenants, it is important to understand you can still be evicted – or evict – under the new laws in certain circumstances. These include:

  • the landlord is selling or moving into the property
  • failure to pay rent when you are not experiencing financial hardship
  • you sublet the property.

If in doubt about the legality of being evicted or if you need to break your lease early, CAV recommend getting in touch with their office for personalised advice.

Words by Melanie Hearse


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