Tenancy defenders win reprieve

Tenancy defenders win reprieve


A newly formed community group has stopped its first eviction in St Peters this week. The Housing Defence Coalition (HDC) has been formed to protect vulnerable tenants during the COVID-19 pandemic.

New Zealand citizen ’Layla’, who recently lost her full-time job, received a call from the tenant from whom she sublets on 18 April, telling her that she must leave the property in three days, because he was voluntarily terminating the lease.

Protest halted by police
Despite police trying to stop their peaceful socially-distanced protest, HDC activists succeeded in negotiating a 14-day stay on Layla’s eviction. She is now in contact with tenancy advice and crisis accommodation services.

HDC spokesperson Ella Haber told City Hub that police had taken people’s names and issued a ‘move-on’ order but that hundreds of encouraging comments and shares on social media showed that “community action could energise the community.”

“We will not be intimidated. This is just the first battle of many in a fight for safe secure housing for all during this pandemic,” she said. The group has already successfully campaigned to stop the University of Sydney from evicting students from its housing.

Although the federal and state governments have introduced a temporary moratorium on evictions, it doesn’t cover tenants without formal rental agreements such as Layla. Even some tenants to whom it does apply are continuing to be served with eviction orders.

Many tenants were already struggling to pay high inner-Sydney rents, which are less affordable than anywhere else in Australia. Currently, thousands of tenants who lost their jobs weeks ago have no means to pay rent at all. Many are waiting on the federal government’s Job Keeper or Job Seeker income support. But even when payments arrive, many will struggle to pay their rent at existing levels. For example, a single casual worker in the arts industry who is currently paying $350 or more a week will not be able to continue to pay that rent if they receive the $1000 a fortnight Job Seeker payment. Others, including international students and workers, have no income support at all.

Last week the NSW Govt announced a number of measures that are supposed to assist tenants and landlords. They include increased funding for the provision of tenancy support and $220 million for land tax relief on condition that it is passed onto tenants who have lost 25% or more of their income due to COVID-19.

This will be of no assistance to more than 80% of landlords who pay no land tax. Landlords and tenants are expected to negotiate “in good faith” to make new arrangements for the payment of rent on an individual basis. Evictions are banned for two months altogether and there can be no evictions due to arrears for six months. The NSW Civil and Administrative Tribunal ( NCAT) will be a backstop to resolve disputes where agreement cannot be reached.

Shortly after the NSW Govt announced changes, the Tenants’ Union of NSW posted “an explainer”, which aimed to describe the changes as clearly as possible. Several days later, the post had been visited a million times, which is equal to normal traffic for a whole year.

In dealing with negotiations in “good faith’, the Tenants Union warns: “We don’t want to see renters being asked to pay more than 30% of their weekly income in housing costs … And any offer that is simply a deferral of rent can’t be considered ‘fair and reasonable’. The outcome of deferred rents for people in financial crisis is simply exacerbation of that distress down the track.”

Although welcoming the NSW Govt changes, NSW Labor, the Greens, Independent MP Alex Greenwich and tenancy advice organisations such as the Tenants’ Union and Redfern Legal Centre remain concerned that they do not offer sufficient protection for tenants or even landlords. On May 11, NSW Parliament will debate and potentially strengthen the policies.

‘Cruel hoax’
Labor’s Shadow Treasurer, Wal Secord, described the measures as a ‘cruel hoax’. Greens’ Housing spokesperson Jenny Leong, who spearheaded the successful campaign for an eviction moratorium, said, “It’s clear that renters have come off second-best in the NSW government’s relief package because the scheme relies on landlords and real estate agents negotiating in ‘good faith’ for reduced rents with tenants who’ve had their incomes reduced due to COVID-19.”

Leong is calling for direct relief for tenants. “So many other sectors in the community have received direct subsidies and financial support but the most vulnerable – those who’ve lost their jobs – have been left to fend for themselves to individually negotiate rental relief. It’s just not good enough.”

“We’re hearing that many real estate agents are playing hardball and threatening tenants, and denying them the opportunity to properly come to an agreement and this type of intimidation means that tenants are unsure of their rights under the new regulations,” Leong said.

Ned Cooke, a solicitor and team leader at Redfern Legal Centre’s Inner Sydney Tenants’ Advice and Advocacy Service, has made similar observations. “We’re hearing from so many people in desperate situations. People who can’t pay rent, who say their landlords aren’t negotiating, and aren’t letting them leave their tenancies early without paying penalties.”

Cooke agrees that people in informal situations such as Layla’s are especially “struggling’ without any protection. This includes people in share houses who are “struggling to pay full rent because housemates have either left, or are unable to return to NSW due to COVID-19 travel restrictions.”

City Hub is aware of cases in which rent reductions have been negotiated then withdrawn and eviction orders issued, There are other cases in which real estate agents are delaying negotiations and demanding tenants provide more personal financial information than a simple document proving loss of income. They are issuing stern instructions that until negotiations are complete, “standard procedures” will apply to the collection of rent. For those unable to pay their rent, such communications are experienced as a threat.

Other long-term tenants that have regularly paid their rent on time but have now lost their income are being offered cheaper, attractive apartments before negotiations for rental relief have even begun. Some tenants have waited weeks without getting any response from agents to negotiate rent relief. At the other end of the spectrum, we have also heard of one example where an agent refused a landlord’s request to contact his tenants to see if they need assistance.

International students need tenancy protection
Alex Greenwich, Independent MP for Sydney, where many international students live, is worried that they have no tenancy protection or income support if they lose their jobs. “International students have long contributed significantly to our education sector and the wider community yet many are facing homelessness as they are no longer able to pay rent, bills or even basics like groceries. I have asked the federal government to extend the Job Keeper and Job Seeker to this cohort.” He is discussing changes with both the federal and NSW governments.

Two weeks ago, City Hub reported that a property management firm called Sweet Potato Living had sent an aggressive email to tenants in scores of houses that it leases from individual property owners. The letter included a warning that local tenants were expected to keep paying their rent and that tenants from overseas that they should go back home.

Last week, Sweet Potato owner and director, Robert Gambotto, sent a new letter to its tenants advising them that due to other tenants, many of whom are international students, leaving their properties, their business is down 45% or more. He claims to be no longer able to meet rental payments on some houses and has informed residents that in coming weeks, house managers may be in touch to offer them rooms in other houses.

The letter is labelled “private and confidential” and not to be shared with others. This instruction could be interpreted by tenants as a warning against seeking advice.  In the letter, Gambotto claims that there will be no evictions but does not explain what will happen to tenants who decline to move from their rented rooms.

Sweet Potato Living provides a glimpse into one facet of Sydney’s huge real estate industry that underpins a city planned around property investment and speculation. It’s an industry that has flourished with the encouragement of governments that put more store on growing investment-led construction than providing secure affordable housing. It includes major developer landlords, small landlords who are enticed into investing savings in property portfolios, banks and other lending brokers, real estate agents, auctioneers, house decorators, property managers, advisors and analysts, lobbyists and a corporate mainstream media that has heavily depended on real estate promotion and advertising. Handsome donations to both major parties have helped maintain policies that favour property investors.

Wobbly pack of cards
Right now, the industry is like a very wobbly pack of cards. Every aspect of it is under pressure. Following a fall in property values in 2018, the property market was briefly on the rise again in the last quarter of 2019. Sales have already dropped more than 25% across Australia in the last month, dissolving hopes of short to medium term capital gains.

Vacancy rates are rising as lucrative short term Airbnb lettings transfer back to single tenancies. Younger tenants are moving back to their family homes. ‘For Lease’ signs are popping up and staying put.  In Marrickville alone, Domain property website is showing 130 more properties for rent than last week. Rents are going down – a 3 bedroom home in Erskineville that would have been listed for $850 last week is now $800.

Landlords who defer loans will pay extra interest in the long run and will still have to pay costs such as strata fees. Some property owners will have no choice but to put their properties up for sale or face foreclosure. But the fact remains that most landlords have higher incomes and far more security than tenants. Lower-income renters, who are exposed to the most brutal impacts of COVID-19 job losses, are at the very bottom of the real estate heap.

To get a landlord’s perspective, City Hub contacted the Ray White Group. It claims to be the largest real estate company in Australia with nearly a thousand offices, many of which are franchises. All up, Ray White manages 230,000 rental properties. It is also involved in every aspect of the real estate industry including mortgage broking and major property developments. Over 30 years it has expanded from its roots in Queensland, riding the wave of negative gearing and other tax incentives for property investors.

This time last year, Ray White was campaigning against Labor’s policy to stop negative gearing on investment properties. Ray White Media referred us to Melinda Fiori who is the Property Manager at its Surry Hills and Erskineville agencies, managing 1850 rental properties.

According to her internet profile, Fiori’s passion for real estate began when she was a child helping out in her father’s agency. She has now worked for seven years for Ray White and aims to provide an “holistic and tailored service, and ultimately form a powerful strategy for maximising investment potential.” She thrives on working “in the trenches” with her team which is why she told City Hub that it had upset her to recently retrench two of them.

Fiori herself already owns one investment property and would like to own more, but right now she is having to pay all of her own mortgage as her fiancé has lost his job. She describes these experiences as giving her “an affinity, a proper understanding. I now know what it feels like to have (retrenchments) in my hands and so you do treat things with a bit more empathy.” She understands that rent negotiation is a very sensitive matter for people who have lost their jobs for the first time.

Initially when the job losses hit inner Sydney, Fiori had tenants who just walked in and handed in their keys, without attempting to claim their bond. She was able to rent some of these properties but it’s getting more difficult. Some prospective tenants are now making inquiries about properties to use the information as a bargaining tool with their existing landlords rather than to move. Rents are already going down.

Fiori describes different sorts of landlords: there are some who take the initiative in asking how they can assist tenants while others unrealistically think that people can keep paying even if they don’t have any capacity to do so. She said landlords initially were negotiating aggressively, but she has seen a change as property owners realise that some rental income may be better than an empty property that can’t be let at the moment.

Fiori said that she only requires evidence of income loss and prospective income from Job Seeker or Job Keeper before she will ask the landlord to consider rent relief. She already has more than 160 requests on her desk. “I’ll be honest with you, I’m nervous,” she said. Fiori anticipates that 15-20% of the applications might not get resolved so she will end up being resolved through the NCAT process. One of her problems is that “right now we keep hearing about the $130 billion” in government assistance but who knows if it is tangible unless it is in your hands.” Uncertainty makes negotiations harder.

Landlords do have insurance but it will not necessarily pay for tenancy losses if owners have already agreed to lower the rent. For this reason, Fiori’s first advice to landlords is to check the fine detail in their insurance policy.

It is in property managers’ interests to keep rent flowing. Fiori’s own income depends on a mixture of commissions on lettings and a percentage of rent collected per property per month. Lettings are already declining. “Make absolutely no mistake: if I have rising arrears, which has obviously happened significantly and if it means that I’m taking $15,000 less a month, that’s huge.” Next week, she will know just how much of a hit her income has taken this month.

Asked if there was anything she wished to add, she said “I think that tenants need to understand that a lot of owners are facing hardship as well. A significant number of them are prepared to not ask for the shortfall to be paid back… but there seems to be an underlying stigma, that it’s something that is owed.”

Fiori has three landlords who have lost their jobs and she finds tenants’ lack of sympathy disappointing. She sees herself as the person in the middle who must determine who is in the worst spot “in what is an incredibly drawn-out process and I think if people can remove the boundary of ‘us versus them’, I think it can be a more pleasurable experience.”

Not an equal playing field
It is this notion that landlords and tenants can be on an equal playing field that underlies the NSW government’s policy. Like many young agents, Fiori feels she can understand both sides of the story but at the end of the day, she will be representing her landlords in negotiations and at the Tribunal. A system which has afforded tenants so few rights for decades has left a legacy of little trust.

Redfern Legal Centre’s Ned Cooke said the idea is that “landlords and tenants will be able to negotiate around the shortfall in rent, but we know that there is a major imbalance in bargaining power between landlords and tenants…. On top of that, there is a perception out there that landlords should expect to eventually get all of their rent back from their tenants. But a landlord negotiating in good faith should be offering a partial rent reduction or waiver, not just a deferral of the payment. Guidelines need to be published making it clear what is expected of both landlords and tenants during the negotiation process.”

“Prolonging the process only increases debt, potentially for both parties. Many tenants are concerned about mounting debt – even if they are protected from being evicted now, they are looking at owing significant money to their landlords in the future. That would be really scary, especially if they have no idea if or when their income will be back to normal. Ultimately landlords can expect a longer term financial benefit by working to keep good tenants in premises for the long term.“

He advises tenants to try to pay some rent even if they cannot reach an agreement with the landlord. The Tribunal may look negatively on a tenants who have made no payments.

Banks also need to “start making real concessions on mortgage and interest payments, and insurers need to come to the table on covering rent lost as a result of COVID-19 under landlord insurance policies.”

The Tribunal could clarify realistic timeframes for these matters to be finalised. It is also not clear how the Tribunal will deal with cases in which it decides that even though rent is in arrears, the tenancy should not be terminated.

Sydney MP Alex Greenwich argues that clear guidelines are urgently needed for what will be accepted as “in good faith” negotiations. He is hearing from tenants who “are reporting negotiations coming to an end after an initial offer to delay a small portion of rent for a short period, with no consideration of lost income or work, or the prolonged uncertainty a tenant may face. Leaving it to the tribunal to determine acceptable terms for negotiating will clog the system and put many tenants at risk of eviction.”

Rental relief is needed
At the end of the day, very few tenants will be able to pay back arrears. To do so would mean they were paying double rent at a time when they are trying to stabilise their finances. For tenants to be protected more direct relief is needed.

“Either the government provides direct funding to renters to cover rental arrears or they legislate to reduce rental payments in line with the percentage reduction in the income of renters – creating large debts for one-third of the population who are renters is no solution,” says Greens MP  Leong

“We will be seeking to ensure that renters are not left with large rent debts after the six month eviction moratorium period is over as there is nothing in this package to stop landlords seeking to recoup the rent difference down the track. This is despite the fact that there are many tax concessions and insurance options for landlords which can mitigate any losses they experience.”

Meanwhile, Leong is worried that some tenants may not even know about the protections that have been offered and for this reason, she wants the government to provide “every single tenant with clear information about the rights and the process that is mandatory for now.”

For those who use social media, information is more readily available and can be quickly circulated breaking through systems that impose one to one negotiations. Landlords who act unfairly may find themselves exposed. The Housing Defence Coalition’s more militant plans to resist unfair evictions is likely to win support. This week a tenant who thought that he had negotiated a reduction in rent but was subsequently served with an eviction notice lost no time in making his local Facebook community aware of his plight. There was no shortage of offers for a supportive social distanced picket outside his premises.

Wendy Bacon was previously the Professor of Journalism at University of Technology Sydney. You can follow her on Twitter  or Facebook. She blogs at wendybacon.com

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