Information for Landlords and Agents impacted by COVID-19

Many members of our community are being impacted by COVID-19 in ways which are causing them to experience financial distress.  As a result, some tenants and landlords are having difficulties meeting their financial agreements.

The ACT Government made changes to help landlords and private tenants reduce the risks of homelessness and financial hardship during the COVID-19 public health emergency.

This information explains the measures put in place by the ACT Government to assist tenants and landlords who are financially impacted by COVID-19, in order to help you understand your rights and find solutions.

Use ACT law

Residential tenancy laws differ across the States and Territories and our COVID-19 response measures are also based on local circumstances.  You should always make sure the information you are relying on relates to the ACT. This fact sheet will be updated if the Commonwealth or ACT Governments announce new measures to help tenants and landlords.

Summary of Changes

In line with the commitment by National Cabinet, the ACT implemented a 6-month moratorium on evictions for non-payment of rent for COVID-19 impacted households between 22 April and 22 October 2020.  The eviction moratorium has now ended.  However, the ACT Government has put in place measures to continue to support tenants and landlords and to provide a smooth transition out of the moratorium.

These measures are:

  • a transition period which limits evictions on the basis of rent arrears accrued during the moratorium period for COVID-19 impacted households in certain circumstances;
  • the continued ability to negotiate reduced rent;
  • a requirement for the ACT Civil and Administrative Tribunal (ACAT) to consider making a payment order instead of an eviction order for COVID-19 impacted household;
  • the continued ability for a tenant in a COVID-19 impacted household to terminate their fixed-term tenancy agreement early and without penalty;
  • continued restrictions on a negative listing being made about a person from a COVID-19 impacted household on tenancy databases;
  • the ability for a tenant from a COVID-19 impacted household who had previous ACAT orders suspended during the moratorium to apply to ACAT to vary or set aside those orders;
  • the continued ability for tenants on pre 6 April 2020 fixed-term tenancies to pay just two weeks rent in advance (all other tenants are already able to do this).

These measures will be in place between 23 October and 30 April 2021 (unless extended).

All other rights and obligations under residential tenancy and occupancy agreements remain the same.

What is the Transition Period?

The transition or grace period provides tenants who are in arrears at the end of the moratorium with a longer period to repay these rent arrears before they can face eviction.

The transition period will be in place from the 23 October 2020 - 30 April 2021 (unless extended). 

If your tenants are in a COVID-19 impacted household and are in rent arrears at the end of the moratorium period you will not be able to evict them on the basis of those arrears during the transition period, so long as they pay their rent as it falls due throughout the transition period.

If your tenant does not pay their rent during the transition period, then you will be able to take the usual steps under the Residential Tenancies Act 1997 to end the tenancy.

Does the transition period or any other measures apply to my tenant?

The transition or grace period applies to households that can demonstrate that they were impacted by COVID-19 during the moratorium period (22 April to 22 October 2020) in the following ways:

  1. A member of the household became eligible for the JobSeeker or JobKeeper payment from the Commonwealth on or after 20 March 2020 OR
  2. Where the household income (inclusive of any government assistance) had reduced by 25% or more due to:
  • one or more rent-paying members of the household being impacted by measures taken by any State, Territory or the Commonwealth in response to the COVID-19 pandemic (for example, COVID-19 business closures or stand-downs); or
  • one or more rent-paying members of a household have had to stop working or reduce work hours due to illness with COVID-19 or to care for a family  member who is ill with COVID-19.

The following support measures will also be available to households who were COVID-19 impacted during the moratorium period as well as those who become COVID-19 impacted between 23 October 2020 and 30 April 2021:

  • the ability to negotiate a temporary rent reduction; and
  • the ability to terminate a fixed term tenancy early without penalty.

 See below for the types of evidence your tenant is able to provide in order to demonstrate that they were a member of an impacted household during the moratorium period.

How can my tenant demonstrate that they are impacted by COVID-19?

Tenants may be able to provide some documents to demonstrate that they have been impacted by COVID-19. The sorts of simple evidence that may show they are a COVID-19 impacted household could include, for example:

  • proof of eligibility for JobSeeker or JobKeeper payment;
  • proof of job termination or stand-down such a letter or email from your employer;
  • proof of loss of work hours such as rosters showing a reduction in hours;
  • proof of prior and current income in a bank statement or payroll; or
  • making a statutory declaration.

Landlords should be aware that some tenants, particularly if they have had informal work arrangements, may have difficulty providing some forms of evidence. Statutory declarations should be taken as an acceptable form of evidence. Landlords and tenants are encouraged to work together to resolve any issues.

What happens if your tenant doesn’t pay their rent during the transition period?

If your tenant does not pay their rent as it falls due during the transition period, then you will be able to take the usual steps under the Residential Tenancies Act 1997 to end the tenancy.  However, if you apply to the ACT Civil and Administrative Tribunal (ACAT) for a termination and possession order and your tenant is in an COVID-19 impacted household, ACAT must consider making a payment order before they make a termination and possession order on the basis of rent arrears (see further below).

What is a payment order and when can ACAT make one?

A payment order is an order that the ACT Civil and Administrative Tribunal (ACAT) can make instead of making a termination and possession order (an eviction order) when the landlord has applied to ACAT to end the tenancy on the basis of rent arrears.  A payment order allows a tenancy to continue and is an order that the tenant pay their rent plus a specified amount towards the arrears.  In other words, it gives the tenant another chance to save their tenancy.

Before making a payment order, ACAT must be satisfied that the tenant will be reasonably likely to make the payments required under the payment order. 

Although ACAT already has the discretion to make payment orders in circumstances where they are considered appropriate, if your tenant is from a COVID-19 impacted household, ACAT will be required to consider if a payment order is appropriate for the tenant before they can make a termination and possession order.  ACAT will still need to be satisfied that your tenant will be reasonably likely to be able to comply with a payment order before they can make the order.

If your tenant breaches a payment order (by failing to pay their rent and any arrears amount specified in the order) you can apply to ACAT to have the tenancy terminated.  You do not need to serve them with a new notice to vacate before making this application.

What if an order that was made by the ACAT prior to 22 April 2020 was suspended during the moratorium period?

Between 22 April and 22 October 2020, the ACT Civil and Administrative Tribunal (ACAT) was able to suspend existing orders (made prior to the moratorium period) (pre moratorium orders) in relation to a failure to pay rent for a stated period of not more than the moratorium period if:

  • the tenant was a member of an impacted household;
  • the tenant had not vacated the premises; and
  • the tenant applied to have the order suspended.

From 23 October 2020, ACAT may vary or set aside pre-moratorium orders if it is satisfied that, since the order was made, the tenant has paid part or all of the rent arrears (or the tenant can otherwise demonstrate that their financial circumstances have improved) and the tenant is reasonably likely to pay future rent as it becomes payable.

If your tenant is in this situation, they will need to make an application to ACAT to have the orders varied or set aside.

Will my tenant need to pay back any rent they didn’t pay during the moratorium period?

Yes. They will still need to pay back any rental arrears. This may be a reduced amount if you have agreed to a reduction in rent.  Your tenant will not be required to repay the difference between the original rent amount and the reduced rent if you did agree to a rent reduction.

If your tenant was in a COVID-19 impacted household during the moratorium period, the transition or grace period (23 October 2020 to 30 April 20201) will give your tenant a longer period in which to repay their arrears before they can be evicted due to those arrears.  However, they will only retain the benefit of this protection if they pay their rent as it falls due during the transition period.

What are the changes to rent in advance?

On 6 April 2020 amendments to the Residential Tenancies Act 1997 commenced which reduce the amount of rent that a landlord can require a tenant to pay in advance from 1 month to 2 weeks.  This change already applies to all periodic tenancies and any fixed term tenancy that commenced after 6 April 2020.

From 14 September until 30 April 2021 this change will also apply to fixed term tenancies that commenced before 6 April 2020.

In all cases, while a tenant cannot be required to pay more than 2 weeks rent in advance, the tenant is able to nominate a longer period for payment in advance should they wish to do so. The option to pay more than two weeks in advance would only arise when proactively nominated by the tenant, not at the suggestion or request of the lessor.

Reduction in rent by mutual agreement

Landlords and tenants may come to an agreement to reduce rent if the tenant is suffering from financial hardship due to the COVID-19 pandemic.

Between 22 April 2020 and 30 April 2021, the mutual agreement can be given effect by:

  • Including a COVID-19 temporary rent reduction clause in the residential tenancy agreement; and
  • Providing a written confirmation of:
    • the agreed reduced rent; and
    • the period the reduced rent applies.

If your tenant is still in financial hardship at the end of the agreed rent reduction you can also agree to extend the rent reduction period if you are in a position to do so.

What is the COVID-19 temporary rent reduction clause?

The COVID-19 temporary rent reduction clause is an optional additional standard term that tenants and landlords may choose to include that amends their existing tenancy agreement to give effect to an agreed rent reduction.

The COVID-19 temporary rent reduction clause provides:

(1)  The parties agree that because of financial hardship suffered by the tenant arising from the COVID-19 pandemic, for the period stated in writing by the parties the rent payable under the agreement is reduced to an amount stated in writing by the parties.

Note: Writing includes any way of representing or reproducing words in visible form including email or text message (see Legislation Act, dict, pt 1, def of writing).

(2)  The parties may, in writing, extend the period in which rent is reduced for a further stated period if the tenant continues to suffer financial hardship because of the COVID-19 pandemic.

What happens after the period of reduced rent period ends?

The ability to include a temporary rent reduction clause in your agreement will remain in place until 30 April 2021.  Until 30 April 2021 landlords and tenants may extend an initially agreed rent reduction period by agreeing to an extended period in writing if the tenant continues to suffer from financial hardship due to the COVID-19 pandemic.

If the reduced rent period is not extended, the rent payable reverts to the amount stated in the residential tenancy agreement. This reversion is not an increase in rent for the purposes of the Act. This means that the rent can return to its pre-COVID-19 amount without it counting towards the requirement that rents only be increased at intervals of more than 12- months or that the rent increases be limited to a prescribed amount.

Implications for landlord’s insurance

Some landlords hold landlord insurance policies in relation to their rental property which may include protection for loss of income due to a tenant being unable to pay rent. If your tenant qualified for the moratorium on evictions and was unable to pay rent, you should contact your insurer about your policy coverage and any potential claim.

Are there any restrictions on listings on tenancy databases for households impacted by the COVID-19 pandemic?

If a household is impacted by the COVID-19 pandemic, information about a tenant’s breach of a residential tenancy agreement during the moratorium period must not be published in a residential tenancy database if the breach relates to a failure to pay rent under the agreement.

This restriction remains after the end of the moratorium period if the tenant remains in arrears for rent payable during the moratorium period.

My tenant wants to end their tenancy, can they do this?

Some tenants may wish to terminate their agreements if they have alternative housing options available.  How they are able to end the tenancy will vary depending on whether they are in a fixed-term or periodic tenancy. An agreement can be ended at any time if there is agreement between you as the landlord and the tenant.

Terminating a periodic tenancy

If your tenant has a periodic tenancy, they can terminate the agreement at any time (regardless of whether they are COVID-19 impacted) by giving at least 3 weeks written notice of their intention to vacate.  The tenancy will end on the date specified (assuming that date is at least 3 weeks after the notice is provided).

They do not have to pay any compensation if they decide to end a periodic tenancy.

You will need to go through the usual end of lease procedures in relation to an end of lease condition report and bond.  Speak to your tenant about how this can be done in a way that complies with any social distancing requirements.

Note that after 3 March 2021 changes to the law will mean that just one tenant may be able to leave a tenancy agreement while the tenancy agreement continues with the landlord and any remaining housemates.  See the Residential Tenancy and Occupancy Reforms page for more information about these changes.

 

Terminating a fixed-term tenancy

If your tenant is in a COVID-19 impacted household they can, until 30 April 2021, give you 3 weeks’ written notice that they want to end their fixed term tenancy early.  They will also need to provide you with some evidence that they are a COVID-19 impacted household.  Evidence could include:

  • proof of eligibility for JobSeeker or JobKeeper payment;
  • proof of job termination or stand-down such a letter or email from your employer;
  • proof of loss of work hours such as rosters showing a reduction in hours;
  • proof of prior and current income in a bank statement or payroll; or
  • a statutory declaration which sets out how you have been impacted.

You will not be able to charge your tenant a ‘break-lease’ fee if they terminate the agreement in these circumstances. If your tenant is in rent arrears, they will still owe you this money at the end of the tenancy.

You will need to go through the usual end of lease procedures in relation to an end of lease condition report and bond.  Speak to your tenant about how this can be done in a way that complies with any social distancing requirements.

The ability for COVID-19 impacted households to terminate their tenancy in this way will remain in place until 30 April 2021.  After that time, the usual rules under the Residential Tenancies Act 1997 will apply again and your tenant may need to pay compensation or a break lease fee if they want to end a fixed term tenancy early.

Note that after 3 March 2021 changes to the law will mean that just one tenant may be able to leave a tenancy agreement while the tenancy agreement continues with the landlord and any remaining housemates. See the Residential Tenancy and Occupancy Reforms page for more information about these changes.

Your tenant applied to have a termination order or warrant suspended during the moratorium – what next?

From 23 October 2020, the ACT Civil and Administrative Tribunal (ACAT) may vary or set aside pre-moratorium orders if it is satisfied that, since the order was made, the tenant has paid part or all of the rent arrears (or the tenant can otherwise demonstrate that their financial circumstances have improved) and the tenant is reasonably likely to pay future rent as it becomes payable.

If your tenant is in this situation, they will need to make an application to ACAT to have the orders varied or set aside before the orders come into effect. 

What is the Transition Period?

The transition or grace period provides tenants who are in arrears at the end of the moratorium with a longer period to repay these rent arrears before they can face eviction.

The transition period will be in place from the 23 October 2020 - 31 January 2021 (unless extended). 

If your tenants are in a COVID-19 impacted household and are in rent arrears at the end of the moratorium period you will not be able to evict them on the basis of those arrears during the transition period, so long as they pay their rent as it falls due throughout the transition period.

If your tenant does not pay their rent during the transition period, then you will be able to take the usual steps under the Residential Tenancies Act 1997 to end the tenancy.

Rates and land tax rebates for landlords

If you choose to reduce your tenant’s rent by at least 25 per cent for up to six months the ACT Government will match 50 per cent of the rent reduction to a maximum of $1,300 per tax quarter (or $100 per week).

For example, if you are renting your property for $600 per week and you reduce the rent by $200 per week, you will receive a total rebate of $2,600 (or $100 per week) over six months.

To benefit from this rebate, it must be a genuine rent reduction without a requirement for the tenant to pay the rent reduction amount back to you in the future. You cannot claim the difference from your tenant at a later date.

This support will be backdated and effective from 1 April 2020 until 30 June 2021. The baseline for the 25 per cent rent reduction is the rent payable on the property as at 1 March 2020.

The government’s share of the rent reduction will be provided to you through a rebate on your land tax bills. If your land tax bills are less than the rebate, the remainder will be applied to your general rates bills for those quarters.

How to apply

To access the rebate, you will complete a simple online application form and provide:

  1. a revised residential tenancy agreement;
  2. written confirmation to the tenant, from you or your managing agent, advising of the temporary rental reduction; and
  3. Your contact details or your managing agent’s contact details.

Significant penalties and clawback provisions will be in place for landlords that provide falsified information or if they do not pass the rental reduction to their tenants.

How has COVID-19 affected ACT Civil and Administrative Tribunal’s (ACAT) operating procedures?

Tenancy and occupancy disputes (including applications to terminate agreements on the basis of hardship) can be resolved through the ACT Civil and Administrative Tribunal (ACAT). ACAT is fully operational however, ACAT has changed some procedures to manage the COVID-19 risk, minimise the spread, and comply with Territory and Commonwealth government advice. Specifically, parties, their representatives and witnesses must attend a listing by telephone or video-link unless ACAT tells parties otherwise. Parties do not need to ask for permission to attend by telephone or video-link at this time.

For details about the arrangements ACAT has in place during the COVID-19 emergency response, please see https://www.acat.act.gov.au/what-to-expect/changes-due-to-covid-19  You can contact ACAT by email on tribunal@act.gov.au or by phone on (02) 6207 1740

 

Where can I go for help?

The Small Business Clinic at Legal Aid is a free service that continues to operate at this time between 2pm and 5pm every Thursday. It provides small business operators with free information and advice regarding their business. This service may be able to provide advice to landlords.  You can contact them on 1300 654 314 or find out more information on their website: https://www.legalaidact.org.au/contact-legal-aid.

Landlords may need to seek private legal advice if in doubt about their rights and obligations.

You can contact the ACT Revenue Office regarding access to the Government’s rates and land tax rebate using the following:

www.revenue.act.gov.au

(02) 6207 0028

Relevant Legislation

To access the relevant legislation, click on the links below:

Residential Tenancies Act 1997

Residential Tenancies (COVID-19 Emergency Response) Declaration 2020 (No 2)(the moratorium declaration)

Residential Tenancies (COVID-19 Emergency Response) Declaration 2020 (No 3)(the transition period declaration)