Follow on update to the COVID-19 tenancy legislation
Twelve months after the start of the COVID-19 pandemic, the consequences of this global health emergency continue. However, with vaccinations now underway in many of the world’s developed nations, it seems we may be over the worst of this unprecedented event.
It is too soon to say when the pandemic will end. Poorer countries are not vaccinating at the same rate as their wealthier counterparts, and the discovery of several variants could still force governments to take further measures.
In Western Australia, as in the rest of the world, the COVID-19 pandemic has had an impact. Although many landlords believed in March 2020 the lockdowns and subsequent halt in economic activity would have dire consequences, the opposite was true. The expected rental delinquency and skyrocketing vacancies never came to fruition.
Instead, the rental property market in Perth saw its lowest vacancy rate in 40 years. However, the WA COVID-19 tenancy legislation did limit the rights of landlords.
With the legislation’s term having expired on the 28th of March 2021, what does it mean for you and your investment property?
WA COVID-19 tenancy legislation
The Residential Tenancies (COVID-19 Response) Act 2020 (WA) applied several restrictions limiting what landlords could or could not do concerning rental and lease terminations. It also created mechanisms to deal with unpaid rent. On the 29th of March 2021, these restrictions and outstanding rental structures fell away. Here is what landlords and tenants can expect now that the legislation has expired, and ordinary tenancy laws apply again.
Rent Increases
Under the WA COVID-19 tenancy legislation, landlords could extend rent agreements with agreed increases. However, the property owner could only apply any increase from the 29th of March 2021. Suppose a landlord has extended a rental agreement with a rental change during the WA COVID-19 tenancy legislation’s effective period. In that case, the tenant needs to start paying the adjusted rate from the end of March 2021.
Terminations
As with rental increases, the WA COVID-19 tenancy legislation did not limit the landlord’s rights to issue any termination orders. What the law did enforce is the applicable date. Any terminations could only take effect on the 29th of March 2021. A few exceptions allowed termination during the effective period, such as a landlord moving back into their premises due to COVID-19 hardship. The law also made provision for other scenarios. These included a tenant not paying rent if they had defaulted on a rent deferral repayment agreement or causing serious damage to the property. With the WA COVID-19 tenancy legislation coming to an end, landlords can now enforce any terminations that needed to wait for the expiry date.
Unpaid rent
The WA COVID-19 tenancy legislation expected tenants to pay rent if they were able to do so. If the tenant found themselves in financial hardship due to COVID-19, then they had to enter into a rent deferral repayment agreement with their landlord. If either party was unwilling to agree to the terms, either the tenant or the landlord could utilise the Mandatory Conciliation Service to reach an agreement.
Provided the landlord and tenant agreed to the terms of a rent deferral payment agreement and the tenant did not meet their obligations, the landlord could terminate the tenancy. The Mandatory Conciliation Service also made provision for other tenancy agreement changes. These included agreeing to end the lease by a set date. In some scenarios, it also allowed the tenant to receive compensation for vacating the premises early.
Since the WA COVID-19 tenancy legislation comes to an end on the 29th of March 2021, the terms of any rent deferral payment agreements fall away unless the signed contract between the two parties extends it beyond the legislation’s expiry date. Landlords and tenants with these agreements need to revisit the terms and ensure they understand their rights and obligations from the 29th of March 2021.
Assistance
The WA COVID-19 tenancy legislation also made assistance available for tenants that were unable to pay their rent. During the legislation’s term, if a tenant lost their job or had their income reduced by 75 per cent or more due to COVID-19, they could apply for a rent relief grant of up to $2,000. The government would pay the amount directly to the landlord, who in turn would reduce the rent owing by the tenant accordingly. On the 29th of March 2021, this assistance falls away as the government enacted it under the WA COVID-19 legislation. If you are a property owner who received this legislative payment, you will need to contact your tenant and possibly revisit the tenancy agreement’s terms.
Want to discuss what this means for you and your investment property?
If you want to understand what the end of the COVD-19 tenancy legislation extension means for you and your Perth investment property, we would love to help. HERE Property offers decades of experience in the Perth market, with our expert team 100% focused on simple, smart, and proactive property solutions.
