Fears over looming COVID rent debt crisis

REAL estate agents are signing struggling renters up to payment plans that leave them at risk of racking up thousands of dollars in debt, a peak legal body says.

Landmark protections for residential tenants put a moratorium on evictions and gave tenants the right to ask for a temporary reduction in their rent if they were facing financial hardship due to COVID-19.

But Barwon Community Legal Service chief executive Bryanna Connell said recent cases showed a “concerning trend” of local landlords and agents telling coronavirus-impacted tenants they would only defer rental payments rather than reduce the rent.

Ms Connell said some tenants on payment plans would have accumulated significant debts that would have to be paid when the protections expired on September 26.

“What this means is that come September 26 … tenants in our region will be left with substantial debts that they cannot afford to pay back,” she said.

Ms Connell said there were fears across the community sector of a wave of evictions towards the end of the year if tenants were crippled by rental debts when the moratorium was lifted.

“Given the COVID-19 situation, there are going to be more people financially disadvantaged who don’t have income,” Ms Connell said.

“While they are already struggling now, (accumulated debt) will make matters worse for them.

“They could end up homeless, they could be evicted and they would be overwhelmed with debt.”

Ms Connell said it was vital tenants facing hardship knew their legal right to apply for a rent reduction and did not feel pressured by agents or landlords to agree to a rent deferral.

Tenants Victoria chief executive Jennifer Beveridge said the group had noted a “worrying trend” of tenants being fearful of retribution for seeking a rent reduction.

“Our strong advice is that people who have experienced loss of income due to the COVID-19 lockdown should seek out a rent reduction,” Ms Beveridge said.

“Rental deferrals, which are effectively debt deferrals, are not what the law intended. People in hardship should not be subjected to unfair tactics by real estate agents.’’

But Real Estate Institute of Victoria president Leah Calnan said she was aware of numerous instances where tenants had failed to provide supporting documents to show their income had been affected by COVID-19.

“I am disappointed to hear about the accusations of property owners not trying to help when it could be equally said that there are tenants that ignore or fail to supply the supporting documentation,” Ms Calnan said.

“The solution is for them (tenants) to be upfront and transparent with their situation.”