Covid-19 Update for Landlords & Tenants

Written on the 22 May 2020

Covid-19 Update for Landlords & Tenants

Emergency Measures for Property Managers

The COVID-19 Act has amended the following pieces of legislation (amongst others) to implement further emergency measures as a result of the COVID-19 pandemic, and the provisions summarised below have now commenced.

Residential Tenancies Act 2010 (NSW) and the Residential Tenancies Regulation 2019 (NSW)

Some provisions that were originally included in Part 6A of the RT Regulation in response to the COVID-19 pandemic have been omitted and, instead, included in the RT Act.

For instance, the definitions originally in clause 41A of the RT Regulation of "formal rent negotiation process", "household", "impacted tenant", "moratorium period" and "rent-paying member" have been omitted from the RT Regulation and included in section 228A of the RT Act, although the definition of "moratorium period" has been amended to mean the period ending 15 October 2020.

Further, clause 41B of the RT Regulation pertaining to when a household is impacted by the COVID-19 pandemic has been omitted and, instead, inserted as the new section 228B of the RT Act.

Termination of tenancy agreements by NCAT on application by an impacted tenant

The RT Act now allows a tenant whose income has been reduced by 25% or more as a result of COVID-19 and who satisfies the definition of an "impacted tenant" to apply to NCAT to terminate a fixed term tenancy agreement if:

the landlord has refused or failed to participate in, or stops participating in, the negotiation process administered by NSW Fair Trading, or

the landlord and tenant have participated in the negotiation process in good faith but have been unable to reach an agreement that would avoid financial hardship for the tenant, due to either the rent required to be paid or the arrears that has accrued or will accrue.

If the Tribunal makes the termination order, the Tribunal may also order the impacted tenant to pay the landlord compensation of up to two weeks rent from the date of termination. Essentially, the effect of this change is that the break fee is capped at 2 weeks rent for impacted tenants in these circumstances.

Property and Stock Agents Act 2002 (NSW) - Further financial assistance for landlords

The COVID-19 Act was amended in the Upper House (ie. Legislative Council) to include a 'recommendation' in section 232 of the PSA Act that the Government amend the PSA Act to allow provision of up to $2,500 financial assistance from the Property Services Compensation Fund to landlords who reduce rent for tenants who:

have lost 25% or more their income due to COVID-19,

have less than $5000 in savings and

pay more than 30% of their income in rent.

Recommendations from the Upper House to the Government about proposed expenditure have no effect unless adopted as Government policy. The Government is continuing to monitor the situation in the tenancy market and does not currently plan to make any further changes to the measures already announced.

If you require to find out more on this topic, contact us to speak to a professional or you can find more info on the REINSW website.

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