Wed. Sep 23rd, 2020

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COVID-19 Effects on Rental Property Market

5 min read
Property market

COVID-19 has caused significant disruptions to the property market, including the rental market. When the initial lockdown restrictions came into effect in March, widespread job losses were the result of this decision. In order to protect tenants, the laws surrounding evictions of tenants across the nation were changed. While the details vary between states and territories, there was unanimous agreement that measures needed to be put in place to protect Australian tenants.

New South Wales

In New South Wales, Parliament passed an act that created an eviction ban. This applies to tenants that have lost over 25 per cent of their weekly income as a result of the pandemic. This act applies for six months following the 15 April 2020. Landlords are only allowed to evict tenants if it is deemed fair and reasonable but must give 90 days notice to tenants.

Victoria

Victoria announced a package of around $500 million to combat rental issues. Approximately $420 million was allocated to landlords of commercial and residential properties. A further $80 million was allocated to tenants in financial stress. This means that renters can apply for up to $2000 in rental relief. To be found eligible, tenants must prove that they are paying over 30 per cent of their weekly income on rent and must have less than $5000 in savings. For landlords to qualify for benefits, they must prove that negotiations have taken place with tenants. Both evictions and rent increase were banned.

Queensland

Queensland implemented some of the toughest laws initially when it comes to renting during Coronavirus. To receive a decrease in rent, tenants did not need to share financial proof or details. Tenants were also not allowed to accrue debt when it came to their rental payments. This was later amended, however, following a real estate lobby campaign. Now, tenants and landlords must negotiate rent price if a tenant is facing hardship. If a landlord unfairly evicts a tenant, they will receive a fine.

Northern Territory 

The Northern Territory has limited measures in place to help tenants experiencing financial hardship due to COVID-19. The territory has outlined that tenants and landlords should negotiate if financial distress occurs.

Western Australia 

Western Australia initially decided to freeze all rent. Repairs and maintenance laws relaxed, with only critical repairs deemed to be necessary to be completed. Perth property management companies have been working around the clock to assist tenants that are experiencing difficulties.

Australian Capital Territory 

The ACT measures cover individuals that lost 25 per cent of their weekly income. The new laws also protect individuals that are on JobSeeker or JobKeeper. Initial plans outlined that there could be no evictions based on failure to pay rent for three months. Rent increases were also banned during this period.

South Australia 

South Australia banned evictions for not paying rent, as well as rent hikes. The state has also prevented accrued rental debt for aged care residents.

Tasmania 

Tasmania outlined that there would be no evictions at all until 30 June 2020. The state announced that they would provide a payment of $2000 for tenants experiencing hardship.

Impacts on the Rental Market So Far

The Reserve Bank of Australia has had held a cash rate of 0.25% for over four months now. This is an unprecedented low set by the Reserve Bank. This doesn’t look like it is changing any time soon either. Looking at property sales, the market has taken a dive.

Rental property market

In regard to the rental market, the impacts of Coronavirus have been tremendous and have led to an increase in Australian citizens being unable to pay their rent and decreased demand for some forms of accommodation. Companies that go hand in hand with property, such as an interior stylist used for furnishing a room for auction, have also been negatively impacted, as their services have less demand.

Areas of the rental market, such as student accommodation, have suffered as a direct result of international travel bans. At the beginning of the university year, Chinese international students struggled to travel to Australia to commence university. Some were unable to at all and had to defer for the time being. When the virus spread across the globe, all international students were impacted and many returned home or decided not to study in Australia for the time being. As a result, the demand for student accommodation dropped significantly.

Additionally, many landlords have struggled to negotiate with tenants in regard to unpaid rent. Many landlords that own homes as investment properties have lost revenue. With landlords unable to evict tenants over unpaid rent, and tenants unable to accrue rental debt, many residential property investors will be impacted.

Stage Four Restrictions in Victoria 

The recent stage four restrictions imposed in Melbourne have caused added challenges for all aspects of the rental market. Property management services are completing inspections online and only repairs and maintenance issues categorised as critical will occur.

There is no doubt that Victorian residents are doing it tough at the moment as everyone is confined to their homes. To make the lockdown more pleasant, outdoor furniture can be purchased online so individuals can go sit in the backyard and get a bit of fresh air.

Looking Towards the Future

One positive outcome that may eventuate out of the pandemic is a greater awareness of the environment and sustainability when it comes to the way we live. A total lockdown across the globe saw pollution drastically decrease. Hopefully, property developers will take this into account for future residential development plans. This could involve solar panel and water tank installation plans.

Ultimately, the only way that the nation will return to complete normality is if a vaccine is released. While all government efforts have been made to boost the economy through plans such as HomeBuilder and multiple stimulus packages, the economy will continue to be impacted as long as restrictions and international travel bans are in place. For now, we can only look at the lessons we have learned as humankind and how we must look after our planet. Purchasing even the cheapest rainwater tanks or planting a tree in the backyard when developing properties in the future will all help to make a difference.

 

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