Plan opens door to confusion
WHAT was lost in the fog of fear and confusion in the early days of the coronavirus crisis is becoming abundantly clear now; this is as much an economic crisis as a health one. And, as the Prime Minister said last week, lives are on the line in both cases.
Those who boldly demand that all workplaces be immediately shut and the country brought to a standstill, possibly for months, typically have the least skin in the game. It’s easy to be cavalier about other people’s livelihoods when your job and salary are secure.
Sadly, lives and not just livelihoods will be lost because of the economic ruination that this crisis has unleashed.
For those in rental homes who have lost their jobs or seen a dramatic reduction in their salary, the announcement by Scott Morrison that there would be a six-month moratorium on evictions was welcome news. No one whose job has vanished due to this pandemic should have to deal with finding new accommodation.
However, the moratorium may also be interpreted by some as an invitation not to pay rent for six months regardless of whether they’ve seen a reduction in their income. The lack of policy detail has created a vacuum that has left renters, landlords and property managers confused and anxious.
It is important to make a distinction between commercial and residential property.
In the current environment no sane commercial property owner would evict a tenant given the chances of finding another are next to zero. Also, the tenant — not the landlord — is typically responsible for overheads with commercial leases, including utilities, government rates, maintenance, building insurance and improvements.
Residential property is an entirely different proposition and one must question the wisdom of conflating the two.
Leaving the policy detail to the individual states and territories is also questionable; surely a national announcement deserves a uniform response across the country. Residential landlords, most of whom are mum and dad investors with incomes of less than $90,000 a year, are not only liable for bank loans but they also pay water rates, insurance, council rates, maintenance, body corporate fees, land tax and more.
Many would have seen their incomes plummet due to the coronavirus crisis and are now being asked to effectively provide “public housing”.
There needs to be immediate clarification on the moratorium that ensures private landlords are protected just as tenants are.
Why should a tenant who was unemployed before this crisis stop paying rent given their financial position hasn’t deteriorated and indeed their government payments have doubled?
If the $1500 per fortnight JobKeeper benefit, announced on Monday, is equal or greater than a tenant’s salary why should they stop paying rent?
The state government must clarify whether those who genuinely can’t pay their rent will be required to catch up after the six-month period.
Are we going to have courts clogged with tenancy issues and further stress and hardship for all involved?
The states will deliver policies around the moratorium but that should’ve been finalised before an announcement on evictions.
Further rental support to ensure tenants meet their obligations is one option but it can be argued that the $130 billion JobKeeper package was designed to help recipients cover their essential expenses including food, utilities and housing.
Landlords can apply to banks for a “home loan holiday” but even if these are granted the banks expect full payment of every cent owed. The home loan deferrals also see interest capitalised, meaning customers end up paying more than they otherwise would.
In Victoria, where the land tax liability for some property owners has doubled and tripled in recent years due largely to bracket creep, many need rental income just to pay their annual bill from the state revenue office.
If assistance isn’t provided to ensure tenants meet their obligations, expect to see landlords in financial hardship selling properties or asking tenants to vacate so family can use the property.
If they’re going to provide free housing, then they may as well provide it for loved ones.