What is the update on the moratorium on evictions?
Due to current Covid-19 restrictions and stay-at-home orders in place across Greater Sydney, the Blue Mountains, Central Coast and Illawarra areas, the NSW Government has introduced new temporary protections for rental tenants.
Residential tenants will be protected from eviction over the next 60 days if they have lost at least 25% of their income during the lockdown period. Landlords will be incentivised to provide rent reductions to struggling tenants with payments of up to $1500.
The announcement came as part of a joint effort from the federal and state governments. Dominic Perrottet, NSW Treasurer, explained that “We will be mandating that there will be no lockouts or evictions during this period of time.”
The landlord relief comes in the form of a capped grant of up to $1500, or a reduction on their land tax, provided they reduce rental rates for their tenants.
Further information can be found at the NSW Government website.
How does the Eagle Protect policy cover me if my tenant loses their job due to Covid-19?
If your tenant loses their job, and gets behind in their rent and then vacates the property leaving rent unpaid, there is cover. It would fall under hardship/rent default.
My tenant is unable to pay, so the property manager put their rent on hold.
- Hardship resulting in rent default is covered, however with the pressure of the Covid-19 pandemic on Tribunals, and the moratorium on evictions, the typical process of tenant’s seeking escape from their obligations under lease agreements via Tribunal rulings has been replaced with negotiated rent reductions or waiver, while tenants remain in occupancy and seek Govt assistance where applicable.
- Acerta have agreed that the policies will respond to COVID-related default claims with the following required for assessment for both indemnity and settlement:
- Evidence all avenues for renegotiation have been exhausted. All states require landlords and tenants negotiate new terms where hardship is being experienced. It has also been made clear by all governments that this is not a rent holiday and if tenants can pay rent they must pay rent.
- Collect evidence of hardship, gathering employer notifications, payslips, Centrelink grant advice, bank statements
- If new terms are simply a deferral of the rent there is no claim
- Have written variation agreement, and review tenant hardship status regularly
- Any claims where the tenant vacates the property will be handled under our usual process
Can Property managers evict tenants during the Government eviction moratorium?
Where you are unable to evict your tenant whilst an eviction moratorium is in effect, the unpaid rent would continue to accrue until the tenant leaves the property, which may be after the end of the moratorium.
However, as above, all states require landlords and tenants negotiate new terms where hardship is being experienced. It has also been made clear by all governments that this is not a rent holiday and if tenants can pay rent they must pay rent.
Failure to negotiate, or other breaches of the lease agreement, such as damages, are still considered a basis for eviction.
The insurer will not require property managers to issue a notice of eviction during the moratorium period for a later claim to be valid, but this is limited to the period of the moratorium.
During the moratorium period landlords are being encouraged to negotiate lower rents for those tenants who have substantially reduced income due to COVID 19. Your cover will be updated to reflect the new rental limit. Any rent reduction should be commensurate with the income reduction being experienced by the tenant, i.e. if income has dropped by 30% or more, then rent can be reduced accordingly by the determined % income drop.
A renegotiated reduction in rent is considered a default by a tenant, so the gap between the original rent and your renegotiated rent will be covered under your policy, subject to the normal policy limits.
If you have any questions at all about how the Eagle Protect policy will respond during this time, please contact us using the button below.