What the COVID-19 tenancy legislation extension means for you
It is fair to say that the Coronavirus pandemic has had a lot of unexpected consequences, none more so than the effect on the Perth rental market.
Looking back to March 2020, with rising case numbers and impending lockdowns, Landlord expectations could rightly have been set for en masse rental delinquency and skyrocketing vacancy following steep job losses and reduced incomes. Fast forward 7 months and what we’re experiencing seems like an alternate reality.
While immigration into WA may have become logistically difficult, there are anecdotal reports of 1,000’s of expatriates returning to Perth, leaving behind countries and states that are struggling with the virus as well as mining workers encouraged to call WA home. As a result, Perth is experiencing a rental demand surge, the likes of which we’ve not seen in 13 years. REIWA data shows that rental listings have reduced eight percent to just 2,926 over the month with the vacancy rate rapidly declining to 0.96%; which is only the third time in 40 years it has dropped below one percent.
On the ground, we’ve seen over 100 attendees at some rental home opens with often desperate tenants bidding up rents up to 25% over asking. Also unique to current circumstances are the relatively large number of ‘sight unseen’ applications received from prospective tenants either in isolation or yet to return to Perth, who have been aided by our use of technology including virtual tours and a fully digital application process.
WA COVID-19 tenancy legislation extension
There is, however, a significant handbrake on allowing the market to respond and normalise to this surge in demand. In September, the McGowan Government, which has earned well deserved praise for their response overall to the pandemic, extended the COVID-19 tenancy legislation, without modification, a further six months to 28th March 2021.
Notwithstanding declining rents and difficult market conditions for over 8 years, a more balanced policy outcome may have been to extend the measures but to only include those adversely affected by economic factors resulting from COVID-19.
Here’s what the COVID-19 tenancy legislation extension means for you and your investment property.
- Rent Increases: Rent agreements may be extended with rent increases agreed, however, the increase in rent may not be applied until 29th March 2021. If notice of a rent increase was issued effective at the end of the initial emergency period, this is still valid and will take effect 29th March 2021.
- Termination: A Landlord may issue a termination for no reason; for example if a tenant does not agree to a new fixed term lease or rent increase, but this may only take effect from 29th March 2021. A Landlord may apply to a court for termination if they are experiencing hardship and need to move into their rental premises. A Termination for non-payment of rent may not be issued unless a Tenant has entered into a rent deferral repayment agreement and has failed to meet thier obligations under that agreement. If a tenant is causing serious damage to a property, then a Landlord may apply to a court for a termination of the tenancy.
- Termination upon Sale: A periodic tenancy may be terminated upon sale of a property, provided that the contract was subject to vacant possession with 30 days notice to the Tenant.
- Unpaid Rent: Tenants must continue to pay their rent if they are able to do so. If a tenant finds themselves in financial hardship due to COVID-19, then they must enter into a deferral agreement with the Landlord. If the Landlord or Tenant is unwilling to do so, either party may utilise the Mandatory conciliation process to reach an agreement, which may include termination of the tenancy. Once a deferral agreement has been reached, then if the tenant fails to meet their obligations, the tenancy may be terminated.
- Assistance: If a tenant has lost their job or had their income reduced by 75% or more due to COVID-19, on or after 20th March 2020, they can apply for a rent relief grant of up to $2,000. This is paid directly to the landlord, and reduces the rent owing to the Landlord by the amount received.
Want to discuss what this means for you and your investment property?
If you want to understand what the COVD-19 tenancy legislation extension means for you and your Perth investment property, we would love to help. HERE Property offers decades of experience in the Perth market, with our expert team 100% focused on simple, smart, and proactive property solutions.