“Unhelpful and out of touch”, Barr takes shot at Real Estate Institute on renters

Dominic Giannini 6 April 2020 64
Andrew Barr

Chief Minister Andrew Barr says everyone must share the pain during this economic crisis. Photo: Region Media.

Chief Minister Andrew Barr read the Real Estate Institute (REIA) the riot act after accusing its principal association of not understanding the gravity of the pandemic and not wanting to come to the table to talk about rent reductions for those who have had their incomes affected.

When asked about real estate agents pushing for rent deferrals in lieu of rent reductions with affected tenants, Mr Barr emptied the bucket on the industry.

“I don’t think the real estate institute gets it at the moment,” Mr Barr said.

“I do need to repeat this: the pain is going to be shared by everyone. There is no world that landlords skate through this without experiencing some pain, and it is more than just deferrals, it has to be about rent reductions.

“Landlords need to be part of the solution, so those comments from the real estate industry were particularly unhelpful and particularly out of touch.”

The ACT Board Director of the Real Estate Institute of Australia, Craig Bright, said he referred the ACT Government to Tasmania’s rental relief bill that sees rents deferred as opposed to reduced.

“If you look at other relief packages, they are all deferrals. If you look at banks, they are deferring interest and principal reductions,” he told ABC Radio on Thursday morning (3 April).

“There are issues with landlord insurance if it is deemed as a rental reduction because it is by mutual agreement, it really should be a deferral because this could be highly problematic in six months’ time.

“People have to remember there are a lot of property owners who are unemployed as well.”

But the Chief Minister said that the ACT Government is already waiving tens of millions of dollars of property tax and landlords would have to pass these reductions on to their tenants.

“Think about the implications for the broader community. It is not just about how much money you can make or you can salvage out of this situation,” Mr Barr said, addressing the REIA.

“They represent a small sectoral interest and, frankly, the broader community is starting to get a little sick of people trying to protect their patch so much and refusing to even budge an inch on this question.

“We will be dragging landlords to the table if we have to.”

The REIA has previously sent out media releases welcoming comments from Housing Minister Michael Sukkar saying renters who cannot pay rent would have to catch up again in six months and told tenant lobby groups that calling for free rent “does not cut it”.

“You need to be more socially and financially responsible than that and perhaps once and for all finally understand that money doesn’t grow on trees,” the REIA said in a statement on 31 March.

“For those tenants who have lost employment or have had their hours reduced, let our industry work through those issues. You need to understand that our industry wants the same outcome as you; to keep everybody housed and feeling secure at this time, but we all need to play our part.

“You simply calling for everyone else to ‘suck it up’ is utter nonsense given the mess that we are all in. You need to show some true leadership for all Australians because that is the only way that we will all get through this.”

Managing director of property management at Independent Hannah Gill, who also sits on the Real Estate Institute of ACT board, said every circumstance is different and it is up to landlords whether they want to defer rent or waive it.

Some landlords have already approached her asking to waive rent because they are in the financial position to do so, she said.

“The way it has been represented in the conversation about tenants and landlords sitting together to find good outcomes, I think the government needs to understand it is just not that simple,” she said.

“We are talking about the six months no eviction, what does that mean in real terms? What if we have a repeat offender for arrears prior to COVID-19? Do they get a get out of jail free card?”

The other problem with rental reduction is the knock-on effect that could see real estate agents out of a job, Ms Gill said.

“The risk we face in the industry is that if we stop collecting significant rental amounts, that highly impacts management fees which means the industry comes under threat and that is another whole series of potential job losses we are facing.”

Mr Bright’s comments came on the same day that the Australian Securities and Investments Commission (ASIC) chastised real estate agents who were calling on tenants to dip into the superannuation to pay rent.

“Financial advice must only be provided by qualified and licensed financial advisers, or financial counsellors, not by real estate agents,” ASIC said in a statement.

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64 Responses to “Unhelpful and out of touch”, Barr takes shot at Real Estate Institute on renters
aaa123 aaa123 11:46 pm 08 Apr 20

And Barr will not extend the non eviction laws to public housing tenants. Who will still be required to pay an amount of rent according to their means even if only small. Whilst private landlords are now effectively forced to provide the public housing but the tenant is not required to pay even a minimal amount according their means.

aaa123 aaa123 7:43 am 08 Apr 20

I wonder what Barr means by dragging landlords to the table. It has already been indicated by what they have passed in Tasmania that this is a blanket ban on virtually all evictions with no right of the landlord to a tribunal process where the tenant must demonstrate actual hardship and that they are paying what they can. So landlords would surely actually welcome a tribunal process where it would shown that a tenant was at least actually paying what was fair. But that would be too much effort so I suspect anything Barr would do in this regard would be an across the board permanent mandatory rental reduction of say 25-50%.

Alex Makedonsky Alex Makedonsky 9:05 pm 07 Apr 20

These are very divisive comments.. he's not a leader. A true leader (think Churchill) could have choosen other words to unite people.

    Alastair McKenzie Alastair McKenzie 8:08 am 10 Apr 20

    Dead right! He is not, and never has been, a leader for all Canberrans.

Harry Sotiropoulos Harry Sotiropoulos 4:27 pm 07 Apr 20

Need to freeze rates and rego

Oh my God Oh my God 1:29 pm 07 Apr 20

Barr is not cutting land tax nor rates. He should be barred!

aaa123 aaa123 10:29 am 07 Apr 20

The means of enforcement for non payment of rent has been completely removed from landlords.

If a rent reduction is agreed to and the tenant then doesn’t pay that then landlord still has no means to enforce payment of rent, and has reduced any claim against their insurance and any future claim against the tenant.

Landlords are just looking to protect their limited legal interests they have left. Make payment of a reduced rent that is affordable enforceable via eviction again so landlords have some incentive to agree to it and it is fairer to landlords.

O L O L 8:07 am 07 Apr 20

After the carona pandemic Canberra rents will go through the roof as there will be fewer rental properties on the market as landlords leave the territory for greener pastures

    JS9 JS9 8:45 am 07 Apr 20

    Which will mean more properties on the market for sale, potentially driving down prices and allowing more people to enter the market….

    The lazy, oft quoted view outlined in your post only tells the half the story those seeking pity want to be heard. Tell the entire story.

    aaa123 aaa123 10:41 am 07 Apr 20

    JS9, Given how many tenants seem to have so little savings they cannot pay their rent after only a few weeks out of work, unless house prices crash to the point of being almost free I can’t see how these people are going to be in a position to have a deposit of any form on their own home.

    JS9 JS9 11:55 am 08 Apr 20

    I wasn’t suggesting those in rental stress would suddenly jump into the market. But there are plenty of people doing ok that aren’t in rental stress, but have not necessarily quite been able to jump in at the moment, or can’t get what they want in the area they want and are biding their time. If a bunch of landlords suddenly sell their properties and expand supply, it is those sorts of people that may be able to more easily make the transition to home ownership.

    There is definitely a second order effect that is conveniently ignored by some solely to exacerbate the first.

Jimmy McGilvray Jimmy McGilvray 10:59 pm 06 Apr 20

People who own investment property also need income. I don’t understand the premise that renters deserve a free ride and it should be the owner of a house who funds it. The owner of the house could just as easily have lost their job and their property is their contingency plan - comments such as “it’s an investment, you should have a contingency plan” is not only not helpful, it’s moronic. It would be just as easy to say that others should have a contingency for losing their job. If renters are going to get a free ride, then private landlords should also get some sort of compensation.

HiddenDragon HiddenDragon 9:29 pm 06 Apr 20

“When asked about real estate agents pushing for rent deferrals in lieu of rent reductions with affected tenants, Mr Barr emptied the bucket on the industry.”

Strongly reminded of Oscar Wilde’s wonderful line about the “unspeakable in full pursuit of the uneatable”.

kiwi66 kiwi66 8:18 pm 06 Apr 20

Tricky all round – another scenario for you.
Australian family but with a New Zealand wage-earner. Never out of work until now. Being NZer can’t access JobSeeker. Being officially a casual with plenty of hours until now (but less than a year in current job) can’t access JobKeeper – property manager says tough, I can rent this. Suggest you leave.
We all need to work together to keep families in housing and landlords with a reliable tenant at the end of it all.

Jen Russell Jen Russell 8:11 pm 06 Apr 20

This man needs to consult with all involved as he clearly has not, include REACT, agents, landlords and tenants and just quit the grandstanding. Be part of the solution and not the problem!

Nicole McGuire Nicole McGuire 6:24 pm 06 Apr 20

Is he going to build more public housing? Private landlords have mortgages too you know. Some need the rental income to live off. This government squeezes the middle class. Go chase Aunty Gina and Uncle Tiggy if you want sweeties.

John Boland John Boland 4:57 pm 06 Apr 20

Imagine If every mum and dad landlord who owned only 1 property sold it tomorrow cause they couldn't afford 'reduced' rent , the tenants would be kicked out by the new homeowner anyway.. I hate the way he talks down to all Canberrans all the time. Unless you're Geocon or Light rail donors he treats the town like garbage. Is he going to 'reduce' rent for the 400 properties he and all of his polly mates own?

    Rowan Parr Rowan Parr 6:17 pm 06 Apr 20

    John Boland except you can’t just kick them out because you want to move in. The new buyers must wait until the end of the agreed end date and the serve notice.

    What I can’t see is if those that want to move into their previously rented house can ask the renters to leave.

Adam Horner Adam Horner 4:03 pm 06 Apr 20

I don’t know how this government expects true collaboration and cooperation between landlords and renters when our own Chief Minister make comments like this that again paint every landlord as greedy and evil. I would be more than happy to sit with our tenants and work out something if need be, but we ourselves are under enormous stain due to job losses and reductions and can’t afford for our tenants to have the “the government says you owe me” mentality if we ever do get to that point. You can’t solve one problem by making another, there are a lot of landlords out there that are not large corporations lining there pockets, we are everyday people that for one reason or another have properties for rent and are facing the same uncertainty and pressure as our tenants, if not more. STOP making it us verse them!

Nikki Horner Nikki Horner 3:17 pm 06 Apr 20

Scrap land tax for landlords this year to provide some relief?

    Dick Ransom Dick Ransom 3:39 pm 06 Apr 20

    Why do landlords need "relief"? If they've lost their jobs then they are able to access Centrelink benefits like everyone else.

Jose Vega Jose Vega 1:54 pm 06 Apr 20

Is he also going to ask Woolworths and Coles to give a 50% reduction in their prices for 6 months?

Robyn Baer Robyn Baer 12:59 pm 06 Apr 20

Late last year the ACT Govt made changes to the Residential Tenancies Act which included landlords having to justify to the Tribunal any rental increase above a CPI-based threshold; the intention being to protect tenants from landlords who suddenly demanded huge increases. The side effect is landlords must increase rents regularly to keep within this new threshold yet meanwhile the rates, land tax etc increases are not tied to CPI. So ACT govt now telling landlords to reduce rents to help their tenants, but no word on if/how the new CPI rule will apply when after this crisis those landlords need to restore the rent to the previous rate. Meanwhile the ATO has the rule that if rent is charged less than market it will reject negative gearing claims on the basis it is not a genuine investment property. Banks also impose conditions and maintain an interest in how income of the security property is run. These issues must be addressed for ACT landlords before they can help their tenants with confidence. Plenty of mum and dad landlords who do want to help but facing their own crisis eg loss of jobs.

    Guy Manton Guy Manton 1:07 pm 06 Apr 20

    Robyn Baer this is what happens when a whole bunch of smaller influence groups get stuck trying to fix large scale problems. You end up with them creating conflicting solutions and unintended consequences. If only the Fed had stepped up and stopped pretending the market was functioning properly.

zardoz zardoz 12:31 pm 06 Apr 20

Here’s my situation:
Kids have left home
Mortgage is paid off.
Madly saving for retirement which will be in about 3 years. Not in the APS.

Planning to downsize we bought another property last year and have tenants in it while we prepare our existing home for sale. That new property is mortgaged to 90% but will be fully paid off when our existing home is sold. Well that was the plan. Our home had been on the market for 4 weeks before inspections were stopped and the housing market shut down.

The tenants seem to be fully employed at this time but their rent is only covering the interest with us paying down some principle each month.

So now can our tenants stop paying rent and let us cover their housing expenses from our pocket? It doesn’t seem fair.

    br8ton br8ton 3:37 pm 06 Apr 20

    Wake up zardoz, an investment is a risk. Landlords need to realise they too are living through the biggest economic crisis since the great depression and they are not immune. Sure, you can kick out your tenants when the lease ends but will you find someone to take the place quickly? probably not. will they be paying the same amount of rent? no. you can forget about any increases to rent for a couple of years.

    JS9 JS9 8:47 am 07 Apr 20

    So you buy an investment property 3 years out from retirement………

    zardoz zardoz 3:15 pm 07 Apr 20

    br8ton and JS9: Did you read my post? I said that I bought the new property to move into. Now. It is not an investment property and has already cost me more money that I’d like to spend. We only bought it because it was exactly where we wanted to live and didn’t want to miss out. Now it has burned us badly.

    The term “investment” means that you think it’s going to make money. I never have thought that. It’s just downsizing as the government is encouraging everyone to do.

Stan Vizovitis Stan Vizovitis 12:15 pm 06 Apr 20

Goes both ways Mr Barr . Your rates/ land tax increases are a substantial reason as to why canberra rents are high with some massive inceases on your part and we are not talking hundreds of $ but tens of thousands $ to the point where you've made it unviable for some to justify the investment in the Act long before this impact

    Guy Manton Guy Manton 12:54 pm 06 Apr 20

    Chele Forest assuming you sold it?

    Guy Manton Guy Manton 12:59 pm 06 Apr 20

    Chele Forest makes sense. Ideally the primary benefits of housing should be to owner occupiers, not investors. It's a stupid system where it is more financially beneficial for 2 separate parties to rent properties to each other than live in their own.

    Steve Aust Steve Aust 3:10 pm 06 Apr 20

    Chele Forest - agree 100%. The huge impost of land tax makes investment in real estate in ACT a waste of time & money.

Ally Ryan Ally Ryan 12:05 pm 06 Apr 20

Even if deferred rent, when it is no longer needed will the landlords then be expecting to be paid for the previous 6 months deferred rent in one hit or will they then push to increase the already exceedingly high rents even higher. Seems to me it’s a lose, lose situation no matter how it’s eventually handled 🤔

    Mark Ryan Mark Ryan 11:03 am 07 Apr 20

    Ally Ryan totally agree. The key for mine is an agreement to suspend the lease for however long and extend this time at the end of the term. Enter into a new temporary agreement during covid19 that allows some rent paid if you are still trading but also does not send you into arrears. Win win.

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