Here's how to ask for a rent reduction if you've been affected by the coronavirus pandemic

How to ask for a rent reduction.
  • With the coronavirus-related business shutdowns keeping many Australians out of work, it can impact the ability of tenants to pay rent.
  • Real estate company Ray White offered suggestions on the best way tenants should approach asking for a rent reduction.
  • The Department of Fair Trading has also offered a template for residents aiming to get a rent reduction.
  • Visit Business Insider Australia’s homepage for more stories.

Thinking of asking for a rent reduction?

The coronavirus pandemic has caused many Australians to lose their jobs which can also put a strain on their ability to pay rent.

In March, the federal government issued a six-month moratorium on tenancies for both residential and commercial tenants who can’t pay their rent because they were severely impacted by the coronavirus. The federal government also encouraged tenants and landlords to agree on rent relief measures.

According to the Tenants Union of New South Wales, if you’ve lost your income, you can negotiate with your landlord about paying lower or no rent for a short time.

Ray White Group Head of Marketing Lisa Pennell told Business Insider Australia via email that legislation will vary between each state and territory when it comes to conditions under which you can get a rent reduction. However, she offered a general guideline on what makes you eligible.

“If your household income has dropped by 20% or more, you are likely to be entitled to a negotiation with the landlord, which can escalate to a mandatory conciliation with the legislative body if an agreement can’t be reached,” she said. “The situation of both sides will be taken into account if it reaches this point.”

In New South Wales, there is a 60-day halt on landlords looking to evict tenants, in addition to the 6-month moratorium. To be eligible, you have to meet some requirements, according to NSW Fair Trading:

  • If one or more of the rent-paying members have either lost their jobs or had a reduced income due to coronavirus related business shutdowns
  • If one or more rent-paying members had to stop work or had their work hours cut down because they contracted the coronavirus, or they are caring for someone with the coronavirus
  • If the above factors result in a household’s income dropping by 25% or more, including any government assistance.

If you don’t meet these requirements, the Tenants Union recommends trying negotiate a rent reduction with your landlord.

“This may be in their interests because it may be much more difficult and expensive to replace you than give some reprieve,” the union said on its website. “Some landlords will be more willing to do this, especially if their mortgage costs are not excessive.”

So how should you go about asking for a rent reduction?

If you’re struggling to pay your rent, Pennell advised contacting your agent “as a matter of urgency”. “A clear line of communication is the key,” she said.

“Bear in mind, many landlords have are also in financial distress as a result of the pandemic, so it’s important both sides recognise each other’s positions and find a way forward that can work for each.”

Pennell also identified the best way for tenants to ask for a rent reduction.

“Contact your property manager and let them know what’s changed – how your household income has changed and what you might be able to afford on a weekly basis,” she said. “It will be helpful for the landlord if you can provide a statement from your employer if you’ve been made redundant or suffered a pay cut.

“You might also consider asking to defer payments on part of your rent, to when you think you might be able to pay.”

NSW Fair Trading has a template you can use when asking your landlord for a rent reduction. In it, you should include the amount of your original household income, how your circumstances and income have changed because of the coronavirus, how much rent you’re able to pay, and any income support you’re getting.

Image: Fair Trading

ASIC will prosecute real estate agents who tell tenants to use their superannuation to pay rent

The Australian Securities and Investment Commission (ASIC) said it would prosecute real estate agents who ask tenants to access their superannuation early to pay their rent.

“Financial advice must only be provided by qualified and licensed financial advisers, or financial counsellors, not by real estate agents who neither hold the requisite licence, nor are an authorised representative of an Australian Financial Services Licensee,” ASIC said earlier this month.

“Tenants facing financial difficulty need sound financial guidance and potentially debt counselling. Specifically pointing them to and recommending them to consider the specific possibility of accessing superannuation is, again, likely to amount to a breach of the [Corporations] Act.”

Real estate agents who do so face up to five years in prison and fines of up to $126,000, while companies face up to $1.26 million.

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