6 April 2020

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

| Dominic Giannini
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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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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.

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%.

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

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.

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

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.

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.

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.

HiddenDragon9:29 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”.

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.

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.

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.

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

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.

Well then Barr needs to put his hand in his pocket and make up the shortfall. No landlord should be expected to foot the bill for this. Unless the federal government enforce a pause on mortgages, Barr can shut up.

Every bank already is allowing for a ‘pause’ on mortgages, have been for weeks…

No, they haven’t. They allowing deferral of payments, while interest continues to accumulate, and compound.

Which is what I said….. a pause for the time being, until things get back to normal…. of course interest is accumulating and compounding, but it solves the short term cash flow issue if there isn’t money coming in the other side.

It shouldn’t be up to governments to subsidise that element of private financial affairs.

And it shouldn’t be up to landlords to subsidise the financial affairs of their tenants. Deferring rent is fine, but expecting landlords to reduce rent or get none and just wear it is an utterly ridiculous idea, and a large double standard. I understand double standards are kind of the Barr governments thing though, so I’m unsurprised by his rant and ridiculous suggestion that property investors just suck it up. If he is making these demands, he can cover the cost or stay out of private contractual and financial affairs.

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