COVID-19 & Rental Properties
Can the landlord terminate a tenancy during the COVID-19 crisis?
The National Cabinet has agreed to a common set of principles to guide intervention in tenancies, including a short-term temporary moratorium on evictions for people experiencing severe rental distress due to COVID-19.
The NSW Government is implementing measures to support these nationally agreed principles, including:
- an interim 60 day stop on landlords issuing termination notices or applying for NSW Civil and Administrative Tribunal (the Tribunal) eviction orders due to rental arrears, where tenants are financially disadvantaged by COVID-19.
- extended notice periods for certain other lease termination reasons.
Who is eligible?
To meet the requirements for a 60 day stop on evictions and the longer six month restrictions, a household needs to demonstrate they are impacted by COVID-19.
A household is COVID-19 impacted if:
- 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
- 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
- the above factors result in a household income (inclusive of any government assistance) that is reduced by 25% or more.
What proof does a tenant need to show they are impacted by COVID-19?
The tenant can provide simple documents to show that they are impacted by COVID-19, for example:
- proof of job termination/stand-down, or loss of work hours
- proof of Government income support
- proof of prior income.
Does the tenant need to pay back rental arrears or will the amount be waived?
The amount of rent arrears accrued by a tenant who has negotiated reduced rent will not automatically be waived. Whether rental arrears will be waived is subject to negotiation between the tenant and the landlord (with assistance from Fair Trading’s dispute resolution process as required).
What are landlords obligations?
A landlord is required to negotiate a rent reduction with the tenant in good faith in the first instance, and 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 circumstances of the specific case.
Fair Trading will be able to assist landlords and tenants in negotiating an agreement if needed.
Along with these restrictions on evictions for rental arrears, the Government will be extending the notice periods for certain other lease termination reasons to 90 days.
At any time during the 60 day stop and the longer six month restrictions, landlords can still apply to the Tribunal at any time to take possession of a property if they are suffering undue hardship.
Will my landlord insurance cover my rental losses?
Landlords should check their insurance policy to see whether they are covered for rental default. Different policies will have different limits and requirements.
Many insurers are adopting new procedures to deal with the impacts of COVID-19, and may require evidence that the landlord has attempted to negotiate with the tenant.
What if a landlord can't afford to provide a reduction in rent?
Landlords should seek to negotiate with their lender to try to obtain an agreement to waive or reduce mortgage repayments. Many lenders are offering to reduce or waive payments at this time.
If this is possible, landlords should have a greater capacity to agree to a reduced rent or charges for a period of time.
The immediate 60-day stop on evictions will also allow time for the tenants to access Government income support and may allow tenants to resume paying existing rent.
What happens once the interim 60 day stop ends?
Once the intermin 60 day stop has ended, a tenant(s) who is still unable to meet their rental obligations due to COVID-19 can only have their tenancy terminated on the basis of rental arrears if the landlord has attempted to negotiate reduced rent in good faith but the tenant has failed to do so.