Rent, rent reduction, and support

Your rent payments are a fundamental part of your tenancy. Not paying your rent is a breach of your agreement and can lead to a substantial debt and even losing your home if you don't take steps to manage it.

The Evictions Moratorium protects 'impacted tenants' from eviction, but this does not mean that you can just stop paying rent, or just pay less rent. You will need to contact the landlord or the agent and let them know that you need to negotiate a rent reduction. You need to be formal and make sure your initial contact, as well as negotiations are in writing so you will have a record of what has happened.  When you reach an agreement it must also be in writing, see our template in the information below.

Many people do not have experience negotiating and this can be an intimidating prospect. The information in this section will help you prepare for negotiation to give you the best chance at an outcome that works for you. For more on the negotiation process itself, see COVID-19 Guide: Rent negotiations

 

What should I do if I can't pay my full rent?

 

If you find that you cannot manage to pay your full rent you should contact the landlord or agent about paying a reduced or no rent for a short period. This may be in their interests because it may be much more difficult and expensive to replace you than give some reprieve, and market rents are now dropping in some areas. Some landlords will be more willing to do this, especially if their mortgage costs are not excessive.

You can try to negotiate a rent reduction regardless of whether you fit within the eligibility criteria of being a COVID-19 'impacted tenant' . See the information below for things to consider before and during negotiations.

 

Step 1: Work out what you need to manage your rent

 

Rent reduction: waiver or deferral. What will work for you?

Rent waiver

A rent waiver generally refers to the landlord agreeing to not collect rent or only partial rent for a period. The tenant is not required to pay this amount back. 

Rent deferral

Rent deferral is a situation where the rent for a period is still payable, but the actual payment is delayed for a period. The tenant has a debt, with an agreed repayment plan that starts in the future. A deferral can be for the entire rent but it is more likely to be for part of the rent. It is important to consider your ability to make future repayments when considering this option.

Think very carefully about any offer of rent deferral, i.e. an agreement to defer rent now, but requiring you pay back rent later – especially where there is no rent waiver included as part of the final negotiated outcome. This may cause significant issues later on. It is a good idea to call your local Tenants' Advice Service to get advice before entering into a rent deferral agreement.

Deferral/waiver mix

A rent reduction agreement can be for a combination of part waiver and part deferral. If you are discussing this option with the landlord or agent ensure you are clear about what portion of the reduction will be waiver, and what portion is deferred.

Rent freeze

A rent freeze is not a rent reduction. It does what you might expect – it keeps things exactly as they currently are, frozen. It means that rents cannot be increased for a period. Current rent is still payable in the regular time periods and it does not mean the rent gets reduced. However you might usefully discuss and confirm a rent freeze with the landlord when negotiating the repayment period, to confirm there will not be a rent increase during the period you are repaying any deferred rent.

Accumulated arrears or unpaid rent

If you are already behind in your rent you need to take this into account during negotiations and discuss with the landlord or agent how you will treat any arrears accumulated up until the point at which you come to an agreement on a new reduced rent. You should also take this into account when calculating what you can afford now and what you can afford to pay in the future.

 

What can I afford?

Rent Reduction Calculator

We have created a Rent Reduction Calculator to help you work out what you can afford or help you consider an offer made by the landlord and what payments options could work for you.

Rent Tracker

Our Rent Tracker Postcode Tool can also assist to show what rents are for other properties in your area.

Putting together a budget

For assistance in putting together a budget you can speak with a financial counsellor. See the Financial Rights Legal Centre website or National Debt Hotline for free resources, or to find a free service near you. You might also find the budgeting resources available on the moneysmart.gov.au website useful. 

Accessing Super

We have heard from renters who’ve contacted their landlords or the real estate agents about being in financial distress, and have been told to consider applying for early release of their superannuation and/or documentation of this before their request for a rent reduction or early release from their lease is considered.

The Australian Securities and Investment Commission has made clear they believe this behaviour may be a breach of the Corporations Act and an agent found to be in breach could face hefty penalties. If the agent or landlord actively encourages you to access your super you might want to provide them this ASIC letter and consider lodging a complaint with ASIC.

 

Step 2: Write to the landlord/agent with your proposal

 

Request a rent reduction

Write to the landlord/agent with your proposal. We have a template letter you can tweak to suit your personal circumstances and use.

 

Outcome in writing

If they agree to reduce your rent make sure you have that agreement clearly in writing. You can use our template Rent Reduction Agreement.


 

Step 3: Negotiations

 

Depending on their response, you may need to negotiate with the landlord or their agent. For information on the how to negotiate, what to do if the landlord won't negotiate, and the Fair Trading Formal Rent Negotiation Process, see COVID-19 Guide: Rent negotiations

 

 

What if I am not yet behind in my rent?

 

If you are facing financial difficulties, and especially if you think you will fall into arrears, you should initiate negotiations with the landlord to reduce your rent. It's better to be proactive.

You do not have to be in rental arrears to access the NSW Fair Trading Dispute Resolution process.

You should get in touch with the landlord or agent as soon as you are able to and request to begin negotiations on a fair rent reduction before you get behind in your rent. If you are not able to reach an agreement you can then apply for Fair Trading’s assistance with mediating further negotiations via their formal rent negotiation process.

See COVID-19 Guide: Rent, rent reduction and negotiation to prepare for negotiation and COVID-19 Guide: Rent negotiations for more on the negotiation process.

What if I get a rent increase?

 

Unlike in commercial tenancies there are no new provisions to stop rent increases during this period for any residential tenants.

However, just because you receive a notice, does not mean that you have to immediately accept it. If you receive a notice of a rent increase you should respond quickly to the landlord or agent, asking them to reconsider. You can make the following points:

  • Question why you are being notified of an increase at a time when landlords are being advised to respond to the current crisis by offering rent reductions (Please see NSW Fair Trading’s guidance for negotiating rent payments here);
  • Advise if an increase will cause you financial stress;
  • Point out that market rents are dropping and they need to consider keeping you in the tenancy or they will have to look for a new tenant at a lower rent.

You can also apply to the NSW Civil and Administrative Tribunal for an order that the new rent is excessive. You must apply to the Tribunal within 30 days of getting a rent-increase notice.

Make sure you read Factsheet 4: Rent increases for the processes to follow.

 

 

 

See also COVID-19 Guide: Rent negotiations

Also check out this video on negotiating a reduced rent with your landlord  from Kingsford Legal Centre's Lunchtime Legal Sessions, presented by the Eastern Area Tenants' Service.