Update for Landlords during the COVID-19 crisis

April 2, 2020

On 29 March 2020, the Federal Government announced that a moratorium on evictions is to be imposed for a period of six (6) months for tenants who cannot pay due to the impact of the COVID-19 virus with respect to both commercial and residential tenancies.

What is a “moratorium on evictions”?
Under almost all leases and subject to some legal hoops the landlord must jump through, a landlord has the ability to evict a tenant if the tenant does not pay rent. The proposed moratorium will mean that landlords cannot do that for the six month period.

Is it in place yet?
Not in Queensland. The power to implement this moratorium is State-based, not Federal. As such, although the directive has been issued by the Federal Government, it is up to the State Governments to independently implement the moratorium through a new law or regulatory regime.

As of 1 April 2020, the Queensland Government has not yet implemented the moratorium. We expect that this will change shortly. However, the law with respect to the failure to pay rent and the hoops the landlord must jump through to evict a tenant remain the same for now; for leases of more than one year, a tenant must first be given reasonable time to pay arrears of rent before a landlord can terminate the lease. The impact of the COVID-19 virus might be relevant to what now constitutes a “reasonable time”.

If the moratorium is implemented, does my tenant still have to pay rent?
Yes, they do, because the moratorium does not lift the tenant’s obligation to pay rent. If the tenant cannot or chooses not to pay rent during the moratorium period, then rental arrears and potentially interest will accrue – the tenant just cannot be evicted for that reason. Commercially, a tenant who can pay rent should continue to do so to avoid racking up substantial arrears.

So what should I do now?
The advice of the Federal Government at this time is to negotiate with both the tenant and your bank (if any), and to come to some sort of agreement which will allow all parties to see the COVID-19 crisis through. This agreement might be in the form of a rent concession or abatement, either in full, in part or on the basis that the concession/abatement is paid back some time later. If as a landlord you are entertaining this approach, we recommend that you satisfy yourself that the tenant’s cash flow is actually suffering from the effects of COVID-19, and that the tenant is not just “jumping on the bandwagon”.

UPDATE (03/04/2020): The Queensland Government is yet to announce any laws or regulations regarding the Federal Government’s advised moratorium. As such, the law relating to evictions and termination of leases remains the same, with QCAT issuing a statement that the law will continued to be applied as it stands.

Please contact your property agent or Wilson Lawyers if you would like assistance formalising any negotiated agreement, or if you have any questions or concerns.**

**The information in this article is current as at 1 April 2020. It is for general purposes only and is not intended to constitute legal advice.