REINSW renews calls for landlord support
The Real Estate Institute of NSW is heaping pressure on the state government to provide additional support for landlords affected by COVID-19, saying several insurers were not honouring rent protection policies if a tenant’s rent is voluntarily reduced, while stimulus announced to date only is available to a small percentage of property owners.
REINSW president Tim McKibbin said several insurance companies had derailed good faith rent renegotiations, as mandated by the National Cabinet, by making voluntary rent reductions ineligible for an insurance payout under many policies.
Mr McKibbin said for a landlord to receive an insurance payout, they would have to refuse to negotiate with their tenant, who would then be forced to seek an order from the NSW Civil and Administrative Tribunal for a rent reduction.
“As you can see in those circumstances, that is certainly not in the spirit of what the government and the community as a whole expects people to do,” Mr McKibbin said.
“And until the tenant can get that order, they are liable for the full rent, and I think it is highly unlikely that the tribunal will make a retrospective order in relation to the rent owed.”
Mr McKibbin urged the NSW state government to enact a recent amendment to its coronavirus relief legislation, which was debated by the NSW Legislative Council earlier this month.
Labor upper house leader Adam Searle successfully moved an amendment for landlords to receive a one-off payment of $2,500 per tenancy, which must be passed on to the tenant in the form of a rent reduction.
Eligibility criteria includes having proof a tenant has lost 25 per cent of their income, has less than $5,000 in savings and 30 per cent of their income goes to rent.
While Mr McKibbin welcomed the move, he said it simply moved NSW into line with several other Australian states - Queensland, Western Australia, Victoria and Tasmania - which had provided assistance to landlords.
“However, I think it is probably not accurately described as assistance, because if the landlord receives the subsidy, that merely empowers them to be able to assist the tenant. It really should be called tenant assistance,” he said.
Mr McKibbin was also critical of the NSW government’s land tax rebate of 25 per cent, which was available for landlords that could prove their tenants were in financial distress and had reduced their rent.
“Only 16 per cent of NSW residential landlords are subject to land tax,” Mr McKibbin said.
“When they say ‘I want relief from the government’, it is firstly only 16 per cent of people that can step forward to do it, and then of that 16 per cent it will only be those people that are adversely impacted by COVID-19.”
If the NSW government failed to act, the result would likely be properties coming to market that otherwise wouldn’t, Mr McKibbin warned.
“My great fear here is that landlords are going to be forced into liquidating their assets to retire debt, and those people who are living on that money, who are looking at that for their own personal expenses, may have to liquidate the asset to cover those expenses,” he said.
“There seems to be this thinking that people are buying rental properties not as investors, but to satisfy some innate need to provide social housing.
“But they are not, they are investors, and an investor has three requirements; they want their asset undamaged, they would like some capital growth and they would like some income.
“Those are the three things that somebody who puts money into the sharemarket expects and they are the same three things that somebody who invests in the property market expects.
“But it doesn’t seem to be well recognised that they are investors.”