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Covid-19 and the effect it is having on Residential and Commercial Tenancies

By

6 April 2020

Good afternoon,

Due to the current low volumes of auctions, the clearance rate is not a true reflection of the property market sentiment and therefore I will not be including clearance rate information in my market updates whilst the Covid-19 issues are affecting the property market.

The REIV has reported that last week there were 126 properties that sold before auction, 32 at auction and 144 private sales bring the weekly total to 302 sales.  These numbers are significantly lower of what would have likely occurred (by more than 50%) had there been no Covid-19 impact.

Residential and commercial tenancies have been a hot topic over the past few weeks with little clarity and guidance being provided by the government until last week.  For commercial leases, the Federal Government is working on a “give and take” tenancy code in which companies with an annual turnover of less than $50 million that have experienced at least a 30 per cent drop in revenue will qualify under this new legislation.  Scott Morrison stated a few days ago that the turnover reduction of the tenant needs to be reflected in the rental waiver from the landlord.

The management of residential tenancies is very different.  The majority of 2.5 million residential landlords in Australia are ordinary Australians in which the majority have mortgages and expensive outgoings.  These landlords have also been impacted by the financial impact of Covid-19 with job losses and suffering businesses.  Banks have offered deferred interest repayments on loans but this only provides temporary cashflow relief and the loan still needs to be paid, just at a later date.

Tenants (who are Australian residents) who have lost their job due to Covid-19 have access to NewStart and JobSeeker packages which should be used to pay for their rent.   Landlords may (and have been) asked to consider rental payment plans or reductions during this time.  There has been a ban on evictions for six months so a tenant may choose not to pay rent and the landlord will be unable to have the tenant removed from the property until after the ban is lifted.   Any claim for ‘loss of rent’ cannot be made until the eviction ban has ceased and the tenant has been evicted.  If a tenant wishes to end a fixed term lease due to severe financial hardship, then they can apply to VCAT to do so.  The Victorian Government hasn’t released any details of a rental assistance package for tenants at this stage unlike some other states, however this could change in the near future.

On a positive note, it is great to see some very early signs that the Covid-19 curve is flattening.  Let’s hope the public continue to do the right thing and practice social distancing practices.

Have a wonderful week!

Kim Easterbrook

CLEARANCE RATES

MELBOURNE

April 6, 2020

This week: 126 Auctions

Sold at auction: 32

Private Sales: 144

[source: REIV]

Rental Property of the week

FOR LEASE  

1/6 Elm Street, Hawthorn – $430 per week

One of only twelve in the well maintained ‘TRIANA RISE’ building this stylishly updated apartment is blessed with a perfect north aspect and complemented by a private and secure landscaped courtyard. Generous light filled living opens to the outdoor retreat via French doors while a renovated Kitchen with separate meals area feature appealing proportions, sparkling presentation and modern stainless steel appliances. A beautifully bright bedroom with built in robe looks out to the courtyard garden with reverse cycle heating/cooling, pristine ensuite bathroom and laundry. Conveniently located in a prized riverside precinct walking distance to Barkers Road trams, schools, parkland and the best of Hawthorn and Richmond services. Off street parking seals the deal.

Please call the office on 03 9592 1122 if you are interested to view.

Refer A Friend…

and Receive a $200 Voucher to Stokehouse.

Refer a friend to our Buyer Advocacy or Property Management services and enjoy a $200* voucher to Stokehouse Restaurant for a relaxing lunch or dinner by the Bay in St Kilda.

Please contact our team on 9592 1122 or email admin@elitebuyeragents.com.au

* Offer applies to a referral that leads to the engagement of our services.

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