Many renters who negotiate a deferral on their rent will face a large lump sum post-COVID-19. Photo: Region Media.
An increasing number of renters are at risk of accruing high levels of debt to landlords if the ACT Government fails to implement a repayment framework for rental arrears, according to a parliamentary committee inquiring into the ACT Government’s response to the COVID-19 pandemic.
The pause on evictions is in place until 27 July and there is no framework or government-provided structure for how accrued rental debts should be repaid.
The committee’s interim report, released on 18 May, heard concerns from the ACT Shelter Association and the Tenants’ Union ACT regarding rental debts as a result of job losses or a loss of working hours during the pandemic.
Chaired by Opposition Leader Alistair Coe, the committee also recommended the ACT Government create a standard terms and rights document for tenants and landlords to help them understand changes due to COVID-19.
In his submission to the committee, the executive officer of ACT Shelter Association, Travis Gilbert, said while many people will be able to negotiate a deferral of rent arrears, they may face a huge lump-sum payment in a few months if they are in a position to pay rent.
ACT Shelter Association is an independent organisation providing strategic advice and advocacy on housing policy issues that affect people with no, or low to moderate incomes.
Mr Gilbert said while the government’s funding of the Conflict Resolution Service to mediate a conversation between tenants and landlords was a good start, tenants need to understand the position of landlords.
“While some banks may have deferred mortgage payments and other things, it is probably no good a tenant living in a property and not being able to pay rent,” Mr Gilbert said.
“There will be a need for financial assistance from someone, somewhere, because ultimately mortgage repayments are a debt that someone will call in and rent is a debt that someone will call in. And if the individual owner or tenant does not have the capacity to pay, somebody may need to step in.”
In his submission, Tenants’ Union ACT committee member Charlie Faulder said the difficulty of the situation relies on altruism between the parties. He said a simple workaround would be that if tenants have accrued recent arrears during the moratorium period, a lessor cannot seek termination for those rent arrears.
“It does not mean that the landlord is not going to get their money, it just means that tenants will not have their backs against the wall, which at the moment they do,” Mr Faulder said
Although the Tenants’ Union ACT was defunded on 1 April this year, Mr Faulder said the organisation was trying to remain active in advocating for renters in the ACT.
He explained that if an amendment were made to the Residential Tenancies Act 1997 that prohibited a lessor from issuing a termination for arrears accrued during the moratorium period, lessors could still go to the ACT Civil and Administrative Tribunal seeking an order for repayments to be made.
ACT Greens housing spokesperson Caroline Le Couteur said while the short-term rent moratorium was now in place, too many Canberra renters were getting a raw deal.
The Greens are concerned some renters will find themselves in extraordinary levels of debt when the moratorium is over.
“We think the Government should establish clear guidelines around reasonable payment plans so that more struggling renters can pay back their outstanding debts without sinking further into poverty. We can also make leases more flexible, supporting rather than penalising renters who decide to move back in with their families while the pandemic is underway,” Ms Le Couteur said.
The ACT Owners’ Corporation Network (OCN), set up to help unit owners and corporations avoid problems, said the burden of rates and land tax was difficult for owners before COVID-19. Now the situation is bleak.
OCN president Gary Petherbridge said the ACT Government’s piecemeal offering to reduce land tax had seen little uptake and a delay in the repayment of rates that were already unaffordable was not a good way of sharing the burden.
He said the ACT Government should allow the early release of bonds held by the ACT Office of Rental Bonds to be applied proportionally as a partial rent reduction. The bond would then be topped up when the tenant is in a position to do so.
“This will have the effect of the landlord not losing out and the tenant not racking up significant arrears,” Mr Petherbridge said.
The select committee was established by the Legislative Assembly on 2 April to provide oversight to the ACT Government’s response to the COVID-19 public health emergency.
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