Businesses forced closure or reduced foot traffic causing no or reduced income? Unemployment or reduced working hours?
The responses to combat this pandemic is creating confusion and frustration among commercial and residential landlords and tenants. Does the eviction moratorium mean that tenants can unilaterally skip 6 months' rent?
In this blog I flag a few points that residential landlords and tenants need to know before taking any actions that contradict the terms and conditions of the lease agreements.
BACKGROUND
In order to understand what you as landlord or tenant can and cannot do, it's important to refer to:
(1) The residential lease agreement that you've signed. It's usually this version - Form 1 - Residential tenancy agreement
(2) The legislation - the Residential Tenancies Act 1997 (Victoria) - you can download it on the Victorian Legislation website. I will refer it as the RTA in this blog.
As of today, there wasn't any reform to the legislation - one can only assume that all provisions continue to be in force. And if you haven't already had an agreement to alter the tenancy agreement, your duties as landlord or as tenant remain the same.
So don't do anything differently unless it is agreed between you and the other party.
To all tenants, You should not abuse this moratorium to stop paying rent without the landlord's approval.
To give you a clearer picture, this is what will happen if you unilaterally stop paying rent just because ScoMo said there's such moratorium:
You stop paying rent without telling your landlord.
You continue to reside at your landlord's property.
Rent continues to accrue (according to section 39 of the RTA).
You continue to avoid discussion with the landlord.
At the end of the 6-months period, the landlord evicts you. Or if the fixed-term lease ends before the 6-months mark, your landlord can give you 14 days' notice to re-possess the property.
Your landlord sends you a bill of 6-months rent (pursuant to section 39). Your landlord can also apply to the VCAT for payment by you of compensation for loss or damage your landlord suffered as a result of your failure to pay rent (section 213B of the RTA).
You will have to pay the bill, unless you bring the matter to the VCAT.
If you choose to go to the VCAT, you will have to rebut the presumption that you needed to pay rent in full and on time (i.e. in accordance with the lease agreement). To do so, you may have to prove that you were experiencing severe financial hardship. If you can't, then you have to pay. If you can, then good on you, but you should've told your landlord. (If I act for your landlord, I will also ask that you pay your landlord's legal costs.)
And this may leave bad record on your rental or credit history, it backfires.
If you become unemployed because of the pandemic - then speak to your landlord, ask for rent relief, chances are your landlord has to agree, but at the same time he/she can seek relief from the bank if the property is mortgaged.
If your income is reduced, ask for reduction of rent. Those who suffer financial hardship should also check their eligibility for government support.
If your income is unaffected, be reasonable and just pay your landlord for the shelter that you are enjoying now.
To all tenants, what can you do if you truly experience financial hardship but your landlord refused to give rent relief
If you truly experience financial hardship because you have become unemployed or have reduced income due to the pandemic, and your request for rent relief was refused by your landlord, my recommendation is to continue to write to your landlord or the rental agent, provide evidence of your financial hardship.
Landlords are also under significant pressure due to the announcement of moratorium on eviction. Most of them can seek relief from their insurer or lender. If they act unreasonably, you as tenant can only persistently write to your landlord for rent relief with supporting evidence and keep good records of these correspondence cause you may need them later on if things are escalated to the VCAT.
To all landlords, if your tenants are being unreasonable, I think there are other ways to tackle the situation (albeit not recommended).
The moratorium on eviction seems to apply to eviction on the basis of non-payment of rent. It looks like there is nothing stopping landlords from giving notices to vacate to their tenants based on the following reasons:
Planned reconstruction, repairs or renovation (60 days notice)
The landlord or his/her immediate family will be moving in (60 days notice)
The premises are to be sold or offered for sale with vacant possession immediately after the lease ends (60 days notice).
Others can be found on the Consumer Affairs of Victoria website.
I am not suggesting that landlords should exploit these if the claims are not genuine. Both parties have to be reasonable. Be honest and reasonable, tackle the issues together and achieve a win-win outcome.
Key points to landlords and tenants：
Be reasonable.
Be transparent.
Speak with each other
ScoMo couldn't be clearer, he said this morning: "And I would urge landlords and tenants to work this out. They're going to need each other on the other side." and "So my advice to landlords is sit down with your tenants and work it out".
(It sounds like ScoMo thinks landlord are the only bad guys here, but the reality is tenants are exploiting this moratorium.)
So my advice to tenants is sit down with your landlords and work it out!