Lockdown safety net: our analysis

Jemima Mowbray • 19/07/2021

Riley Brooke

This week NSW heads into a tougher lockdown. Non-essential workers across three local government areas – Fairfield, Liverpool and Canterbury Bankstown – are restricted from leaving their LGAs for work; all non essential retail and work on construction sites has been shut down for at least two weeks; even public transport - bus, train and ferry services – will be scaled back. For many renting households, especially renters who are casual workers, this is going to have a significant impact on their income and ability to make rent and cover other essentials.

Riley Brooke

Last Monday we wrote in partnership with NCOSS and Homelessness NSW to the NSW Premier and Treasurer requesting they take action to ensure adequate financial supports and protections against eviction and forced moves were urgently re-introduced in NSW. On Tuesday (13 July), the Commonwealth and NSW Governments held a joint press conference to announce additional income supports, a 60 day stop on eviction for ‘impacted renters’, and financial support to encourage landlords to reduce rents for impacted tenants. They also committed an additional $10 million to increase the temporary accommodation available (through hotels and motels) for people experiencing homelessness during lockdown. This crucial support package arrived just in time to help soften the blow of the new restrictions commencing today.

So, let’s run through in a little more detail what was announced last week.

Crucial financial help for people who lost work as a result of the lockdown

First, a financial support package for NSW residents who’d lost work throughout the lockdown was announced. The Federal Government with the NSW Government announced the COVID-19 Disaster Payment would be increased, from $325 to $375 for people who have lost between 8 - 20 hours of work, and from $500 to $600 for people who have lost more than 20 hours of work. Rather than a one-off payment, it is now a weekly payment, and once eligibility is established you will receive it automatically for as long as the lockdown is in place, or until your circumstances change. They have removed the liquid asset means test which applied when the lockdown first started. The payment is also being expanded so that those outside Commonwealth declared ‘hotspots’ are still eligible – with the Commonwealth government footing the bill for those within the hotspots, and the NSW government covering funding for payments for the rest of NSW (those outside Commonwealth ‘hotspots’). The increase in the payment up to $600 or $375 depending on how much work was lost, takes the support to the same level as JobKeeper in its second phase (or during extension no.1, Sept 2020 – early Jan 2021).

Eligibility has expanded, but many still miss out

Renters are more likely to have lost work or income as a result of lockdowns, just as they were the first time around. The increased payment is crucial to ensuring many will be able to meet rent. But just as they were last time, there are a number of renters who won’t be eligible or able to access these payments.

Eligibility requirements include being an Australian resident (a citizen or permanent resident) or having an eligible working visa (or, "hold a visa that gives you the right to work in Australia"). This is broader than the Australian resident requirements under JobKeeper, and means payments will be available to migrant workers who last time were excluded. This is a significant improvement. However, we're worried about those who remain excluded from the payment.

Migrant workers who haven't yet got back jobs lost last time around won't have access to the payment. Asylum seekers without any work rights outside of the pandemic have very limited or no income support and struggle to find accommodation or access supports around housing. They are not able to get emergency or temporary accommodation even if they have no other housing or accommodation available to them. Only very limited funding is given to specialist homelessness services to provide accommodation for refugees and asylum seekers. People are finding themselves with no options, sometimes having to stay in, or move into, unsafe housing arrangements. We know refugee and migrant services, along with key homelessness sector organisations have been raising this issue with the NSW government – advocating strongly for additional funding to ensure their services can provide some support, at least during lockdown.

We also unfortunately haven’t seen an announcement of a ‘top up’ disaster payment for people on income support. Many people who generally receive income support may only keep themselves afloat with additional part-time work – that they may well now have lost. For those who were on low or very low incomes already, the loss of work hits especially hard. Recipients of any Commonwealth income support are specifically excluded from the disaster payments available to other workers, including part time workers who lost hours. Last year a COVID-19 supplement (a top up payment) was provided for those on a range of income supports and a number of one-off payments for those on pensions. The additional ‘top up’ payments recognised that support was needed to ensure people were able to ‘stay home’ – whether they were struggling as a result of lost work, or just because generally rents are so high – and income supports so low. It is hard at the best of times to keep a roof over your head if you’re relying on income supports. The raise the rate for good campaign explained it pretty clearly in their response noting that hundreds of thousands of people on income support in NSW won’t be able to access any of the additional financial supports to help them get through this lockdown: ‘You can’t stay at home if you can’t afford one’. 

A 60 day stop on evictions for ‘impacted tenants’

The NSW Government also announced the implementation of a 60 day stop on evictions for 'impacted renters', that is renters who have lost significant income. For the purposes of the eviction ban, ‘loss of significant income’ is calculated as a decrease of at least 25%, as compared to the household’s average income over the previous four weeks. Impacted renters who have fallen into rental arrears but continue to pay at least 25% of their rent are protected from eviction for the arrears. Landlords are also strongly encouraged to provide ‘rent relief’ and to negotiate to reduce rents – as they were under the NSW eviction moratorium framework last year. The government will be providing some relief for landlords who waive some or all rent by providing land tax relief for landlords who pass the full amount of the discount on to their renters; or a payment of up to $1500 for those landlords not eligible to pay land tax relief. 

What has improved?

There are a couple of ways in which the current ban improves on last year’s moratorium measures.

Ban on issuing termination notices

During the 2020-21 eviction moratorium, the stop on evictions was implemented through a prohibition (or restrictions) on Tribunal issuing orders for vacant possession and terminating the tenancy. One problem we saw was that many impacted tenants on receiving a termination notice simply left. They didn’t realise the restrictions in place required their landlord negotiate a rent reduction in good faith before the landlord could go to Tribunal for orders to end the tenancy. The tenants simply vacated – often at significant cost, financial and otherwise, to themselves and their family.

This time around we’re really glad to see that the government addressed this by implementing the ban at the point of notice – that is, landlords and agents are prohibited from issuing a termination notice for arrears to impacted tenants. We know a prohibition on notices won’t necessarily stop all landlords from issuing notices of termination, but we think in practice it will reduce the number of notices that are issued. And introducing appropriate penalties to discourage landlords from issuing unlawful notices would be a very good idea!

Clear 25% minimum rental payment for impacted tenants

Another tweak was to make clear the terms under which the ban applied – that is where a tenant is paying at least 25% of their rent each week, their landlord can’t issue a notice of termination. Last time around the amount of rent a tenant was required to pay to be ensure they couldn’t be evicted was left, to some extent, to be negotiated. Of course, the current ban doesn’t implement a waiver of 75% of rent. A waiver and its ultimate amount still has to be negotiated between tenant and landlord. But in the short term it takes the pressure off the renter and provides some certainty and clarity about how the ban will work.

While some things have been improved, there a number of ways in which this doesn’t go as far as previous protections, or doesn’t address significant gaps we’ve previously identified and raised.

Where are the gaps?

The protections introduced this week do not include protections against any type of eviction apart from rental arrears. Renters who don’t quite fit the definition of ‘impacted tenant’, or who receive an eviction notice for some other reason can still be forced to move during lockdown.

No ban on 'no grounds' evictions

The eviction moratorium protections in place from March 2020 to March 2021 also only placed restrictions on evictions for arrears. However, they did extend notice periods for several other types of eviction, such as end of fixed-term 'no grounds' evictions; termination for breaches other than rental arrears; and evictions for longer-term tenancies, i.e. a tenancy of 20 years or more. The extension of the notice period was incredibly useful to renters, particularly in regional areas where vacancy rates have been extremely low. Tenant advocates in regional areas told us the notice period extensions had been one of the original moratorium’s most useful elements, as it gave tenants a little more time to find a new place to live following eviction. This time around notice periods aren’t touched.

When the 2020-2021 eviction moratorium came in, we very quickly raised our concern that ‘no grounds’ evictions were still being allowed. As we feared, we saw landlords during the moratorium period, who simply turned around and issued ‘no grounds’ notices instead when they couldn’t evict for ‘arrears’. To their credit, when the NSW government brought in transitional protections earlier this year they did introduce provisions to address this problem specifying that impacted tenants couldn’t be evicted for ‘no grounds’ unless the Tribunal felt it was ‘fair and reasonable’ to do so. We hoped government would again put in place a similar restriction, but unfortunately there is no protection against the use of ‘no grounds’ loophole under these new provisions.

No clear obligation to negotiate a reduced rent

Last time around we also raised the clear flaws with the rent reduction framework: broadly, it was too weak and too vague. Rent reduction negotiations for residential tenancies were not mandated, as they were with commercial tenancies. Where negotiations between the renter and their landlord failed, there was no independent arbitration available where a fair rent might be established. According to this City Futures report released in February 2021, at least a quarter of all private renters lost income during the pandemic, but only between 8% and 16% of renters were able to secure a rent variation from their landlord. A similar proportion were refused a variation, more were discouraged from even asking, and more simply left their tenancy as they couldn’t afford the rent.

The introduction of a relief payment of up to $1500 for landlords who provide a reduction in rent is designed to address this problem and encourage landlords to be more open to reducing rent. And it’s a very welcome addition to the relief package. Last year relief was provided only through a land tax discount. With only a small proportion of landlords actually paying land tax, this was a was seriously undersubscribed and not particularly effective measure.

We’re really glad the way relief is being provided has been rethought and added to. But unfortunately, the onus or ability to apply for the relief payment remains solely with the landlord and that could be a problem. We believe a landlord who doesn't claim the $1500 relief could lose the right to evict, or at least reduce the amount of arrears they can claim for at eviction by that much. So for example, if an impacted tenant has arrears of $2000, but the landlord declines to claim the $1500 and refuses to reduce the rent, then the arrears should be treated as if it is $500. But otherwise, there’s nothing a tenant can do to compel the landlord to provide a reduction and claim back that money from the Government. And sadly we know from experience that if they think it's going to be too much hassle to apply for the payment, some landlords won't apply and just won't reduce rent at all - especially if they don't think they'll face any financial hit for not doing so. A much more effective way of delivering the payment would be to instead provide it directly to the tenant, or at least allow tenants to initiate the application process for the payment.

What supports will be available for renters with significant arrears once protections end?

There also isn’t clarity about what will happen to renters who, after the 60 days, have accrued significant rental arrears. If a renting household pays 25% of their rent over the coming two months while the ban is in place, this still leaves the other 75% potentially accruing as a debt. They could be left with up to six weeks’ worth of unpaid rent. Even considering a potential waiver their landlord may offer (for $1500 in line with the available relief payment, perhaps more if the landlord is willing to provide a greater reduction, but perhaps less) the accrued debt will likely still remain significant. Those who don’t get their work hours back, and many low-income renting households, will seriously struggle to manage this debt. Without long-term planning and additional support beyond the coming two months, this moratorium simply delays future evictions, and the associated financial and emotional hardship they will bring.

No stop on landlords and agents accessing renters' homes

Finally, we are yet to see the Public Health Orders adequately address access issues. We have heard from many renters over the past few weeks who are deeply concerned because agents and landlords are continuing to book in routine inspections, or make appointments for viewings for prospective buyers or tenants in their home, even while COVID is spreading rapidly in the community. This includes households with people who are immunocompromised, elderly, and otherwise especially vulnerable to COVID-19. And the Public Health Orders don’t yet allow renters to refuse access, even though the non-essential nature of many of these requests seems to clearly go against the intent of the strong messaging being sent out from NSW Health and daily from the Premier and Chief Health Officer. We're currently advocating for stronger restrictions on access into renters' homes and collecting case studies on this. If your landlord has requested access during lockdown we'd love you to tell us about it via our very quick survey.

So, all up, what do renters actually get from this week’s announcement?

If you can prove you’ve lost at least 25% of your household’s income, and if you can continue to pay at least 25% of your rent, then legally, if your landlord issues you a notice of termination for rent arrears, that notice won’t be valid and the eviction will not be enforced during the 60 days. If you meet the ‘impacted’ threshold, then your landlord is being asked to consider giving you a rent reduction, and will be eligible to receive up to $1500 from the NSW Government to subsidise that reduction. This will not be mandatory, and will ultimately rely on good-will from your landlord.

The ban is in place until 30 September 2021, unless it gets further extended.

What is needed? Better – and permanent – hardship protections

We know that coming up with appropriate protections and frameworks under pressure and on-the-fly is difficult to get right. On top of that, governments are limited in their responses - they can only use powers given to them under legislation. Unless the legislation is already in place, or Parliament can meet very quickly, government can't always achieve what they might want in responding to crisis. We see this in the current response. NSW Parliament isn't due to sit again until August - government had to make a choice between implementing a response around evictions quickly or comprehensively and opening it up to debate - both from people who think they should go further, and people who think they are going too far. In the circumstances it is reasonable to choose haste. This doesn't let the NSW Government off the hook in terms of now addressing the gaps in the package they've provided. But it does suggest we also need to be thinking about how we can make permanent changes to our tenancy laws to ensure we have better protections built into our system so that they are crisis ready.

Each wave of COVID-19 and subsequent – necessary – restrictions and lockdowns, has resulted in a wave of households all simultaneously experiencing unexpected financial hardship. The Government has then scrambled to bring in some temporary protections, which tend to have been created under very high-pressure circumstances, and inevitably are flawed. The piecemeal protections brought in as things change during the pandemic have generally been insufficient, and have also faced delays in introduction and implementation. This has left many renters unable to make use of them to their fullest extent. As an example, the two-week cap on break fees for COVID-19 impacted tenants implemented last year was introduced only after many renters had already been forced to end their tenancies early and paid break fees of hundreds or thousands of dollars.

Wouldn’t it be better if our tenancy laws included well-thought-out, appropriately designed supports that could be immediately relied on by renters during emergency situations? As climate change progresses, extreme weather events will become more severe, and occur more often. Unpredictable events such as bushfires, floods and storms could cause similar strain in the future for a large number of households similar to what we’ve seen during this health crisis –and when that happens, in the midst of a crisis, may be the worst time to be trying to create an appropriate protection framework on the fly and under extreme time pressure. And, of course, individual households across NSW, every day, experience a crisis – health, family, relationship, employment – that causes unexpected financial setback and disruption to their household finances. We think hardship should - and could - be met with as much compassion and support when it is experienced by just one household, as when the compounding impact of many households experiencing hardship threatens the economy as a whole.

Outside of a large-scale crisis situation, and prior to COVID-19, many other sectors including banks, as well as water, telecommunications, and energy providers have financial hardship frameworks in place to help support consumers who are experiencing financial difficulty. If a homeowner experiences unexpected financial hardship – loss of a job, death in the family, illness or injury, and more – and cannot pay their mortgage over a period of time, they are generally able to access their bank’s hardship framework and request a 'hardship variation'. During the period of the 'hardship variation', their mortgage payments may be reduced, deferred, or in some cases even waived entirely – depending on their individual circumstances. Why shouldn’t renters have access to a similar kind of hardship framework or supports? Not just during a global pandemic, but available as a well-designed safety net whenever unexpected crisis hits – whether that be for a household, a community, or the whole of NSW.

During the current lockdown we're more aware than ever of the importance of a having a safe and secure home to allow people to isolate and reduce the risks of transmitting or contracting COVID-19. But the importance of housing in providing support and some security during crisis and ensuring recovery coming out of crisis is not something we discovered during the pandemic. It has long been accepted. Indeed, it is one of the guiding principles of the well known, well regarded Housing First model that safe and secure housing is required prior to, and not conditional upon, addressing other health and well-being issues.

We hope the announced tenancy protections and support package do the work the NSW government intended over the coming weeks, but also that the government and Fair Trading might consider further tweaks or changes where it's clear things aren't working. But on a broader scale, it's now become very clear our tenancy laws don't quite work when it comes to providing an adequate safety net to support renters through unexpected crises – be that on a small or a larger scale. We think it's time to look at how a hardship framework for renters can be made a permanent feature of our renting system. 

 

More info:

See also our Renters' Guide to COVID-19.