The Real Estate Institute of the ACT (REIACT) is concerned amendments announced to the RTA Emergency Declaration, which will come into effect on 23 October 2020, will have a grave impact on both tenants and landlords currently experiencing financial difficulties due to COVID-19. 

Whilst the Institute is in full support of a transitional period to enable tenants to repay arrears accrued during the Emergency Declaration period, the serious concern remains for those tenants who do not have the ability to repay arrears and the requirement, as set out in the Emergency Declaration Amendment, to continue to meet ongoing rent commitments after the 22 October.

At a Glance:

• In August the Institute submitted a Rent Assistance proposal in response to ACT Government draft measures
• Impacted tenants unable to pay arrears payment plans after 22 October 2020 to appear before ACAT with eviction the only certainty under the amendments
• REIACT say there is a sharp increase in the number of investors now leaving the ACT market

"The Attorney General has quite simply signed the eviction order for these tenancies.” said REIACT CEO, Michelle Tynan. 

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Michelle Tynan, CEO, REIACT. Photo: REIACT

"In August the Institute submitted a Rent Assistance proposal in response to the draft measures presented to them by the ACT Government on 24 July 2020.

"In short, the proposal would provide rental assistance to those most vulnerable tenancies in arrears, whilst also ensuring landlords would have a mitigated loss of 25 per cent of the total arrears owing.

"A condition of the landlord accepting this rent assistance payment would be that the tenant would stay in their home."

Ms Tynan said the obligation of repayment by the tenant would then become an arrangement between the tenant and Government over a longer period (similar to the current Bond Loan Scheme), to enable an affordable and sustainable repayment plan.

The Institute modelled this proposal for the Government on the basis of 1000 tenancies (which we believe would be a worst case scenario), with funding to come from the already established commitment of $39 million set aside for the Land Tax Credit Scheme, which to date, has only resulted in a maximum take up of approximately $2 million.  

“The transition process now implemented by the Government will require impacted tenants who are unable to maintain rent and arrears payment plans after the 22 October 2020 to appear before ACAT on two occasions, with eviction the only certainty under the amendments," said Ms Tynan.

"The Government has failed to acknowledge that many landlords simply cannot afford to continue to offer reduced or deferred rent indefinitely.

"For the past six months their costs have not reduced, yet Government expects the goodwill of landlords to continue to be a viable option." 

The Institute asked Government to also take into consideration the possibility of more tenants and landlords facing further hardship when Federal Government stimulus packages decrease on the 30 September.

“We are concerned that this will further exacerbate the need for rental assistance for some tenants as the current stimulus has enabled them to meet their commitments thus far," said Ms Tynan.

"In October 2019, Attorney General Gordon Ramsey, announced a number of changes to the Residential Tenancies Act stating that 'as more and more people choose to rent it’s important that they have the appropriate safeguards to feel established and comfortable in their home', the Amendment announced by the Attorney General yesterday has certainly removed any such safeguards for those tenants now impacted COVID-19." 

Ms Tynan said the other alarming concern raised by the Institute is the number of landlords now listing their properties for sale.

“Our members have seen a sharp increase in the number of investors now leaving the ACT market," said Ms Tynan.

"The uncertainty as to the end to the pandemic, coupled with increased outgoings, (including land tax and rate increases) and legislated rent increases now limited to a stringent CPI calculation, has compelled many investors to list their properties for sale.

"With an already critically low vacancy rate and the ACT being the only jurisdiction nationally to experience a decline in the affordability of rent in the June quarter, affordable rental properties in Canberra will continue to decrease.

"The combination of this and the Amendment announcement by ACT Government will most certainly add further pressure to the already struggling community housing and welfare providers.” 

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