Centorame’s fears and frustrations are echoed across Australia by landlords who have purchased investment properties and need rent to pay the mortgage.

There are estimated to be more than 1.5 million Australian households with a single investment property and about 400,000 with two, according to investment bank Morgan Stanley.

Queensland’s measures are totally over the top and unfair for landlords. — Patrick Bright, buyers’ agent

"They are confused and bewildered," says John Gilmovich, president of the Property Owners Association of NSW. "Many are on the edge – very concerned and stressed. None of the reforms focus on the welfare of the landlord."

Lisa Jemmeson, head of litigation for real estate specialist Jemmeson Fisher, says some of the reforms "don’t hit the right people who need relief".

For example, NSW and Victoria are offering landlords discounts on land tax as part of their relief packages to ease financial pressure.

"That’s for the top end of town and does nothing for the vast majority of landlords," says Gilmovich, adding that land tax kicks in for properties worth more than $600,000 in NSW.

Nearly nine out of 10 mum-and-dad landlords are not liable, he says.


Insurance setback

Residential property landlords are facing a new setback as insurers refuse to cover shortfalls resulting from agreements with tenants to reduce weekly rental payments, despite pleas from the federal government for negotiated agreements.

Major insurers like Aon are also warning they will not provide cover where the landlord and tenant mutually agree on a suspension of rental payments, which might happen if tenants lose their jobs, or losses caused by not being able to find a new tenant.

States are following up the federal government’s decision to provide help to tenants caught in the fallout from COVID-19 with assistance packages for rental distress.

"Queensland’s measures are totally over the top and unfair for landlords," says Patrick Bright, a buyers’ agent. Regulations in NSW and Victoria are considered fairer but flawed.

Angry landlords are petitioning the Queensland government to introduce rent deferrals, rather than rent waivers, for tenants in line with the federal government’s model.

They are also demanding a minimum income threshold for tenants to meet before they can qualify for protections. In NSW and Victoria a 25 per cent drop in household income applies.

Queensland landlords want a requirement for tenants to substantiate a rent reduction request and introduce guidelines on property inspection requirements.


Gilmovich says landlords of commercial or residential tenants seeking rent deductions or waivers should:

Ask for evidence that they are seeking relief through government programs, utility companies and their banks;

Ask them to provide documentation to confirm business distress, including current revenues and sales figures;

Advise that while evictions have been temporarily halted, other parts of the lease are enforceable, including accruing rental debt; and,

Document any agreements on discounts or deferments in letters signed by all parties. The documents might be necessary for tax and audit, or for future support schemes.

In Victoria, landlords cannot terminate a tenancy that falls into rental arrears. Tenants can quit the agreement without paying fees for breaking the lease, or stay and negotiate a rent reduction.

The state has $80 million set aside for grants to struggling tenants to pay landlords. In NSW it is $220 million.

For NSW landlords there is a 60-day stay on evictions due to rental arrears as a result of COVID-19, together with six-month restrictions on rental arrears evictions for those financially disadvantaged by the pandemic.

"Consider how much of a reduction you can afford," a spokesman for the Victorian government says. "Consider the help available from the government, and other support you might be able to get, such as mortgage relief from the bank."

Disputes can be referred to a dispute resolution service in both states.

"Landlords could be out of pocket for months before any decision is made," says Gilmovich.


Lenders offer support

Steve Mickenbecker, group executive for Canstar, says major lenders have committed support for investors, mirroring that offered to home borrowers.

This includes allowing a six-month repayment holiday for those who have reduced income or job loss as a result of the pandemic.

"Repayment holidays have been around for a long time now, but the banks are lowering the hurdles," says Mickenbecker. "Applications can be made online and citing COVID-19 may shorten the application process."

Graham Cooke, insights manager at Finder, warns that interest continues to accrue and is added to the principal outstanding.

For example, a borrower with a 20-year $500,000 loan on an average principal-and-interest variable rate of 3.9 per cent who defers payments for six months will increase their debt by about $10,000. That will add $58 to their monthly repayments, or nearly $14,000 over 20 years.

Buyers’ agent Cate Bakos says other options include switching from principal and interest to interest-only, which will provide some short-term relief but result in higher principal costs.

Other lenders are easing loan redraw facilities that allow the borrower to take out any extra repayments made over the required minimum repayments on the loan.