The Residential Tenancies Amendment (COVID-19) Regulation 2020 (the Regulations), which commenced on 15 April 2020, ushers in important changes for residential and boarding house tenancies in New South Wales which will apply for the next six months. This article provides a high-level overview of these changes.
Do these changes apply to all forms of residential tenancies?
No. None of the protections in the Regulations apply to social housing tenancies. Social housing providers are specifically excluded from the definition of 'Landlord' under the Regulations and the current processes in place for dealing with social housing tenants, remain unchanged.
Amendment of Residential Tenancies Regulation 2019
Which residential tenancies are covered by the Regulations?
The protections in the Regulations apply predominantly to tenants who have been financially impacted by the COVID-19 pandemic (impacted tenants). A tenant is an impacted tenant if they are a member of a household where:
one or more of the rent-paying members have lost income or work hours as a result of the COVID-19 pandemic; or
one or more of the rent-paying members have had to reduce work hours due to contracting COVID-19 or caring for a family or household member with COVID-19;
Tenants that are not impacted tenants are expected to comply with their current tenancy arrangements including paying their rent on time and in full.
Six month eviction moratorium
For the next six months (moratorium period), landlords are generally prohibited from issuing termination notices or applying for termination orders on the grounds of non-payment of rent or charges, in relation to impacted tenants.
During the moratorium period, a landlord can only issue a termination notice or apply for termination orders from the NSW Civil and Administrative Tribunal (NCAT) due to non-payment of rent or charges if:
- the landlord gives the notice or applies for the order at least 60 days after the commencement of the Regulations;
- the landlord and tenant have participated, in good faith, in a formal rent negotiation process; and
- it is fair and reasonable in the circumstances for the landlord to give the termination notice or apply for the order.
The rationale behind the 60 day stop on evictions for non-payment is to allow tenants time to access government income support (which may allow tenants to recommence paying their rent) and for landlords to negotiate with their lenders for a reduction or waiver of mortgage repayments. It is also intended to allow a reasonable period for landlords and tenants to negotiate a variation of rent if needed.
Residential tenancy databases
Landlords are prohibited from listing tenants on residential tenancy databases (otherwise known as "blacklists") for the non-payment of rent or charges if the tenant was an impacted tenant at the time of non-payment.
Notice periods for termination of tenancies
In place of the usual termination processes set out in the Residential Tenancies Act 2010 (NSW), landlords must give at least 90 days notice of the termination of fixed term tenancies, periodic tenancies, tenancies of 20 years or more, and any tenancy where the termination is due to a breach of the residential tenancy agreement for reasons other than the non-payment of rent or charges by the tenant. This 90 day notice requirement applies to all tenants, not just impacted tenants.
Amendment of Boarding Houses Regulation 2012
Similar amendments have been passed in relation to residency agreements in boarding houses regulated by the Boarding Houses Act 2012 (NSW). Boarding house residents who are impacted by COVID-19 will be afforded more generous periods of notice prior to evictions which are based on non-payment of boarding fees.
Which boarding house residents are covered by the Regulations?
The Regulations protect residents who:
- reside in a boarding house;
- have lost income or work hours as a result of the COVID-19 pandemic; or
- have had to reduce work hours due to contracting COVID-19 or caring for a family member with COVID-19;
- as a result, the resident's weekly income has been reduced by at least 25% (inclusive of any government assistance that resident is receiving).
Evicting boarding house residents for non-payment of fees
During the moratorium period, before evicting an impacted resident due to non-payment of fees, proprietors of boarding houses must give the impacted resident:
- 6 months written notice; or
- 60 days written notice if the proprietor and impacted resident participated in negotiations about the fees but were not able to reach agreement because the impacted resident did not participate in good faith.
Other reasons for evicting boarding house residents
Proprietors of boarding houses must give residents 90 days' written notice of eviction unless the eviction is based on the resident:
- causing or permitting serious damage;
- using the premises for illegal purposes;
- abusing or harassing other residents; or
- non-payment of fees (where the resident is not an impacted resident).
How do the Regulations affect landlords?
Landlords that find themselves having difficulty meeting their mortgage repayments as a result of these changes are being encouraged by the government to negotiate with their lenders for a reduction or waiver in their mortgage payments while they are receiving reduced rent from their tenants. The 60 day 'stop' in issuing termination notices is intended to give the landlord and its lender a sufficient period of time to come to a mutually agreeable arrangement.
It is also important to note that at any time during moratorium period, a landlord suffering undue hardship may apply to NCAT for an order to take possession of the property.
Separately, the NSW State Government has flagged its intention to defer or waive land tax for landlords on the basis that those savings will be passed on to tenants. While this legislation has not yet passed, it does highlight the government's acknowledgement that the Regulations have the potential to impose hardship on landlords and its intent to provide some relief in this regard.
Where to from here?
The introduction of these laws has certainly changed the immediate landscape for landlords, tenants, boarding house residents and boarding house proprietors. We expect that over the coming weeks and months, there will be many parties seeking to negotiate their tenancy agreements and loan repayment conditions. As can be expected when people's basic needs for accommodation in challenging economic times is competing with the financial interests of landlords and lenders, there may be a requirement for enhanced dispute resolution processes and assistance. The NSW Fair Trading Dispute Resolution Process has had additional resources allocated to enable it to operate quickly and efficiently in the wake of these changes. It is expected that this service will be an important piece of the puzzle in the implementation of the Regulations and obtaining resolutions between landlords and tenants.
This is commentary published by Colin Biggers & Paisley for general information purposes only. This should not be relied on as specific advice. You should seek your own legal and other advice for any question, or for any specific situation or proposal, before making any final decision. The content also is subject to change. A person listed may not be admitted as a lawyer in all States and Territories. © Colin Biggers & Paisley, Australia 2020.