Residential Leases during COVID-19: What You Need to Know

Residential Leases during COVID-19: What You Need to Know

Coronavirus has undoubtedly had a substantial impact on the Australian economy. This unfortunately means that some residential tenants are struggling to keep up with their rental payments, due to increased unemployment or standing downs. However, the NSW government is introducing measures to support landlords and tenants and encourage them to work together through this difficult time. In this article, we explore some of these measures to help you understand landlord and tenants obligations under these new initiatives.

New Measures:

The new measures include an interim 60 day stop on landlords issuing termination notices or applying for a NSW Civil and Administrative Tribunal eviction order due to rental arrears, where tenants are financially disadvantaged by COVID-19. This will be followed by limitations for 6 months for rental arrears evictions for tenants financially disadvantaged by COVID-19.

For Tenants:

To meet the requirements for the 60 day stop on evictions, residential tenants needs to demonstrate that they are impacted by COVID-19. A household is impacted by COVID-19 if:

  1. one or more rent-paying members of a household have lost employment or income (or had a reduction in employment or income) due to COVID-19 business closures or stand-downs, or
  2. one or more rent-paying members of a household have had to stop working or reduce work hours due to illness with COVID-19 or due to COVID-19 carer responsibilities for household or family members, and
  3. the above factors result in a household income (inclusive of any government assistance) that is reduced by 25% or more.

What are the obligations for a tenant?

  • To be honest and act in ‘good faith’ in negotiations with their landlord
  • Provide the landlord with relevant information and proof regarding their situation if they have been impacted by COVID-19
  • Tenants should have regard to the landlord’s financial situation, including whether they rely on the income to cover expenses such as mortgages
  • Tenants must work towards achieving a mutually satisfactory outcome.

All tenants who are not impacted by COVID-19 are expected to honour their existing tenancy agreements and continue to pay all rent and charges in full.

For Landlords:

It is important for landlords to have regard to the tenant’s situation and be considerate of the financial burdens they are facing due to COVID-19. However, this must be weighed against the landlord’s personal financial situation and how a rental reduction may impact their income.

What are the obligations for a landlord?

  • To negotiate a rent reduction if their tenant has been impacted by COVID-19
  • Landlords can only seek to give a termination notice or apply for an eviction after the interim 60-day stop if it is fair and reasonable in the context of the specific case
    • Only after negotiations have failed can a landlord seek to terminate the agreement. The NSW Civil and Administrative Tribunal (NCAT) will have discretion to assess whether it is fair and reasonable to evict in the circumstances of each case
  • To be honest and act in ‘good faith’ in negotiations with their tenant
  • Landlords should be honest and frank about their financial situation, including whether they rely on the income from the tenant to cover expenses such as mortgages
  • They must work towards achieving a mutually satisfactory outcome with the tenant.

Fair Trading will also be able to assist landlords and tenants trying to reach an agreement if needed.

Further Information

It is important to be fully aware of your obligations under your residential lease agreement. If you would like more information on how we can assist you with your matter, do not hesitate to contact us on 9963 9800 or at law@etheringtons.com.au. Check out our blog here for further more information and analysis on the restrictions and rules in place during COVID-19.