Many Victorian renters have been impacted by the coronavirus (Covid-19) pandemic. With the reported slump in business confidence as reported in August and employment rates of 7.5%, renters who have lost their jobs are facing difficult times ahead. As difficult as this is for renters, landlords are themselves feeling the pinch, with many relying on investment property rental income to pay their mortgages.
To combat this, the Victorian Government has introduced rent relief grants for renters who are experiencing hardship because of the coronavirus. As welcome as this is, there’s just one problem: most landlords and renters don’t know what rent relief grants are, if they’re eligible, how to apply for one, what the grant should be used for, and how the grant amount is calculated.
So, if you’re a landlord and live in Victoria, here’s everything that you need to know about COVID-19 rent relief grants, including what a rent relief grant is, how they’re calculated and what you need to know if an existing agreement is about to expire.
If your tenant cannot pay their rent or has advised you that they’re having trouble paying rent, you should first try to agree on an amount that they can afford to pay each month. Landlords need to be clear about any reduction and renters must agree to the new cost.
Whereas there’s no predetermined rate or amount that renters are required to pay, any reduction in rent should be reasonable in the circumstances. Some renters may be able to afford the rent with a small reduction. Others may need a little more help, especially if they’ve been forced to accept reduced hours or are relying on income support.
The Victorian Government has created an $80 million fund, providing renters who are experiencing financial hardship as a direct result of the Covid-19. Those who qualify for assistance will receive anything up to $3,000 as a one-off payment. The grant is specifically for renters living in a primary residence to help them have safe, secure, and stable accommodation.
The grant has recently been increased from $2,000 to $3,000 and extended the time that you can lodge your grant application to 28th March 2021. Additionally, anyone eligible for the grant can have up to $10,000 in personal savings as of 4th September 2020.
The grant is administered by the Department of Health and Human Services (DHHS) and is paid directly to landlords or property agents once approved.
To be eligible for rent relief in Victoria renters need to have a registered reduced rental agreement with Consumer Affairs Victoria. Deferral of rent is not considered to be a rent reduction and therefore is not accepted as part of the eligibility criteria. Total household income must be less than $1,903 per week with 30% or more being paid as rent.
There are no citizenship or permanent residency requirements for applicants. This means that casual workers on holiday who have a working visa can apply as can skilled visa holders and seasonal workers. New Zealand citizens and anyone with a refugee and temporary visa can also apply for the rent relief grant.
Any Covid-19 rent relief grant is calculated based on tenants’ individual circumstances. The amount of the grant depends on renters’ income level and how much of their income is paid as rent. To see if you’re eligible for a Rent Relief Grant, click the link here and answer five short questions.
It’s important that landlords are aware that any payment made by the DHHS counts as a credit towards renters newly negotiated rental payments. It should be used as a deposit to go towards the rental balance and should only be used to pay the rent.
The grant should not be used as a top-up for the landlord to make up the difference between the previous rent and the reduced rent as part of a rent reduction. Also, any rent relief Victoria grant cannot be used to pay for utilities and other household expenses.
Yes, when money is paid to the landlord or agent it’s trust money. Just in case anyone is unaware, a trust account is a special purpose account where money received by an estate agent or agent’s representative is held until a settlement can be reached, or it can be released to the property owner.
This includes any rent on residential, commercial, industrial or storage leased land or property and any accompanying freehold buildings and is applicable to any residential property rented for more than 90 days. Any rent relief grant paid to landlords in Victoria is considered trust money. Section 59 of the Estate Agents Act 1980 states that any money received or held on behalf of another person for a transaction is trust money. The details can be found here.
If there’s a credit at the end of a tenancy, any outstanding amount should be credited back to the tenants. This is required by law.
When the reduced rent agreement has expired or is about the expire, any credit can be used towards the rent. However, if the landlord and the tenant agree, any period of reduced rent can be extended. This applies to any privately reached agreement or an agreement that has been reached with the help of dispute resolution services.
Any extended agreement should be registered with the DHHS. If not, it may void the terms of what you’ve agreed with your tenants.
In August 2020, the Victoria Government moved to extend the ban on evictions for non-payment of rent and rental increase until the 28th March 2021. Landlords who provide rent relief to tenants in Victoria who have been impacted by Covid-19 will be eligible for land tax relief in 2020 and 2021.
Covid-19 has plunged Australia into a period of economic uncertainty. Having not had a recession since the negative growth of 1991, the county is now facing an economic challenge to rival The Great Recession of 2008 and the dot com bubble burst at the turn of the millennium.
With this comes job losses or reduced hours for some which can result in economic hardship. Fortunately, the Victorian Government has moved swiftly and decisively to help landlords and renters with a $500 million relief package.
This, they hope, will stabilise the rental housing market. The money will help landlords by preventing a loss of income and renters who have lost their jobs or been forced to accept reduced hours because of the Covid-19 pandemic. It’s essential that landlords understand the package. Why? The Rent Relief Grant can help to safeguard their property investment(s).
To find out more about rent relief, or list your property on one of Victoria’s premier residential property management websites, click the link here to get in touch with us.
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