In April 2020, the NSW Government introduced the Residential Tenancies Amendment (COVID-19) Regulation 2020 (the Regulations).
The Regulations were initially meant to end in October but have been extended for a further 6 months, meaning they are in operation until 26 March 2021.
A summary of the important points to note are as follows:
- If a tenant, or a member of the household, is financially impacted by COVID-19, Agents are prohibited from terminating the tenancy, applying to NCAT for termination for non-payment of rent, or applying to NCAT for failure to pay rent, or other charges under the lease for a further period of SIX MONTHS.
- This period is called the ‘MORATORIUM PERIOD’.
- During the Moratorium Period, we may only evict an impacted tenant for non-payment of rent if:
- we provide a termination notice or apply for an order; and
- the parties have participated in formal rent negotiations; and
- it is fair and reasonable for the landlord to give the notice or apply for an order (such as under grounds of hardship).
New notice periods
Under these Regulations, we now have new notice periods. For the duration of the Moratorium Period, we need to give no less than 90 DAYS’ NOTICE when terminating a tenancy for:
- End of Fixed Term (no longer 30 days’ notice)
- Periodic leases (unchanged)
- Breaches (no longer 14 days)
- Tenancies longer than 20 years.
Criteria for ‘financially impacted tenants’
The criteria that tenants now have to comply with in order to qualify for protection under these Regulations are:
- One or more rent-paying members of the household have lost employment or work, OR
- Have had a reduction in their hours or income; OR
- Had to stop working or reduce hours because of a COVID-19 illness AND
the result of any of the above means that the weekly household income has been reduced by at least 25%. This clause goes on to define that the weekly household income is inclusive of government assistance.
The importance of the bolded words above means that all of those need to be satisfied in order for them to qualify. You can’t have an ‘OR’ without the ‘AND’.
If we do have to terminate tenants after being able to fulfil the above criteria, the Tribunal will have consideration for the following:
- Any OFT advice provided during the negotiations
- If the tenant has continued to make any rental payments during this time — if a tenant stops paying rent, this will work in the agent/landlords favour
- If the owner is experiencing financial hardship – this is normally very difficult to prove at NCAT in normal circumstances. The owner saying they can’t afford their mortgage will not suffice =– the owner will need to be able to prove this
- If the tenant is able or unable to find reasonable alternative accommodation
- If the tenant is a vulnerable person – this will take into account their mental health status
- Public health objectives
NCAT has the power to terminate frustrated tenancies as a result of COVID19 or reduce/waive the break lease fee.
NCAT does not have the power to reduce rents where tenants have requested reductions that have not been approved by landlords, nor does it have the power to force a landlord to reduce the rent.
This means if a tenant incurs rent arrears, the tenant will still need to pay it back if an arrangement between the parties cannot be reached.
The Lease is a legally binding contract and it can only be amended by consent of both parties.
Tenants, landlords and agents alike are encouraged to remain transparent, communicative, and sympathetic towards each other in situations such as this one.
Agents should ensure they completely understand the ramifications of the Regulations, as we are seeing many examples of owners wanting to terminate at the end of the fixed term but are now required to give 90 days which affects their plans.
If Agents are not aware of these changes to the legislation, they expose themselves to unnecessary risk.