Tenant Stopped Paying Rent

Trops on 30/03/2020 - 22:02
Last edited 01/04/2020 - 15:41

Tenant (in Victoria) stopped paying rent in February before covid-19 hits hard. With the current 6months moratorium on eviction, he is basically staying rent free while not communicating with the agent. We have already indicated to the agent that we are happy with alternate arrangement or discount on rent during this difficult time provided he communicates with us. Agent has already put in an application to VCAT (not sure whats going to happen).

Background: tenant rented for the last 18 months and lately rent has been delayed by 5-7 days minimum. We have allowed him to pay fortnightly instead of monthly when he requested.

We are happy to weather some of the loss for now. But this cannot go on for 6 months can it? No rent payment while being protected from being evicted? Surely there must be a consequence…

Update 1/04/2020
- so our agent has informed us that as this occurs before the moratorium /covid-19 situation - VCAT hearing will still proceed this friday and tenant has not indicated /communicated that he’s in financial hardship due to the virus

  • in terms of mortgage repayment our broker has told us not to freeze repayment if you can afford to as it will cost you more in the long run

  • many comments do suggest that landlords are loaded - yes some are but not us - we are both mid-30s and wife is currently stay-at-home awesome mum with 3 kids. I am working 5-6 days week also struggling with low market confidence.

  • landlord insurance in place - it can only be claimed once eviction noticed is issued (it will cover lost rents from the date of eviction). So if notice is issued this friday - we are already out of pocket from February to March.

Home & Garden

Comments

              • SlickMick on 31/03/2020 - 17:09
                +4

                @Boogerman: This is the comment I came here for. Lots of "you must be doing better than me so hope you suffer" mentality when it comes to landlords on ozbargain

                • Boogerman on 31/03/2020 - 18:02
                  +2

                  @SlickMick: No different to landlords who blame people for their circumstances & tell them to “stop being leeches”, to put it in your assumptive context

                  • legendary-noob on 01/04/2020 - 09:03

                    @Boogerman: I agree landlords that make statements like that are terrible human being
                    But again not all landlords are like this, and not all tenants are freeriders too.
                    If my tenant had approached me and explained to me their situation, I'd happy to come to a reasonable compromise with them
                    I acknowledge the situation and how bad it is, but to totally waive the rental makes it worse for landlords
                    Again, going totally radio silent and letting landlords take the hit just because they should or government said so, is wrong

            • gmdarts on 31/03/2020 - 12:47
              +1

              @gromit: Do not think they think of anything too much Just put bandaids on things and hope they work better
              Look at the no more flights into here They
              are now saying 8-12 flights per day

            • Never Pay RRP on 31/03/2020 - 21:10
              +2

              @gromit:

              The government really didn't think through the no eviction thing very well.

              I'd imagine the government policy was to avoid people being made homeless during a period of self-isolation/quarantine, rather than for any economic purpose

        • jacross on 31/03/2020 - 08:34
          +1

          Of course. It's to temporarily ease your burden, not give the you in 20 years free money.

        • trapper on 31/03/2020 - 13:25
          +3

          The 'arrears' will never be paid anyway.

          If someone can't afford rent now they are not going to magically come up with the $10k+ they owe in six months time.

          • SlickMick on 31/03/2020 - 17:13

            @trapper: it's amazing how the arrears get caught up when the eviction notices get issued

        • TheBilly on 31/03/2020 - 13:27
          +3

          Yes this is true. But if rent is not paid then it is a complete write off. Scummo has really mishandled this coming out to the media without a plan.

        • Hangryuman on 04/04/2020 - 14:29

          yes and yes in theory - but tenants who lost their jobs are also less likely to pay as having no fixed location they can simply up and shoot through

          if they want to rent again through agents there is that risk of bad listing on databases, which is why they then tend to look for self-managing owners who don't use those databases, so need to be extra careful to avoid bad tenants

          clues like 'I don't have the bond right now but need to move urgently - can I move in now and pay you the bond next week ?' (which then doesn't happen)

    • Trops on 30/03/2020 - 22:44
      +3

      Already applied but from what i understand interest will continue to accumulate

    • irony on 31/03/2020 - 10:43
      +10

      What about Rates, Land Tax, Insurance, Water, Strata Fees, Maintenance?
      These bills will keep coming in and presumably need to be paid.
      They easily total over $10,000 per year.
      How does a landlord pay them with no rent?
      (mortgage payments may be put on hold, but the debt still accrues.)

      • abb on 31/03/2020 - 13:46
        +15

        How does a landlord pay them with no rent?

        Sell the property.

      • Intoxicoligist on 31/03/2020 - 16:44
        +21

        Get a second job, stop eating avocado on toast, pull themselves up by their bootstraps, no more $5 coffees.

        You've got to have a go to get a go

      • knk on 31/03/2020 - 17:46
        +12

        Exactly this. It's not even how does a landlord continue to pay them, even if the landlord can why the hell should they have to?

        The renter gets an out, do the same for us landlords. Put our payments for all utilities, mortgages (including interest), rates etc on hold and maintain the property for us over the next 6 months. Also, pay for any depreciation incurred during the period where the tenant was rent free.

        If you want to push pause for 6 months, do it. Don't do it by halves.

        • whooah1979 on 31/03/2020 - 17:57
          +3

          Why stop there? They should also QE to top up everybody’s portfolios to pre March levels.

          • knk on 31/03/2020 - 18:02
            +8

            @whooah1979: Or just offer a form rent assistance and leave eviction law as is.

          • gitl on 31/03/2020 - 23:49
            +8

            @whooah1979: I keep hearing people try and make the argument to "top of share price losses too while they're at it". This is a straw man argument that doesn't even make sense.

            My shares took a dive because of market conditions, not because the government decided to simply step in and mandate an unavoidable loss without recompense. However this artificially induced loss because of an ill thought out idea isn't the same as a "natural" loss due to property values, the occasional bad tenant, etc.

            Whilst I appreciate that the government is to help keep people from becoming homeless due to the lockdowns they are placing (I'm not saying it's a bad idea, it has to be done), the two aren't the same thing.

            • knk on 01/04/2020 - 10:22
              +1

              @gitl: Exactly.

              If we end up in a recession and my property value drops, I can't rent it etc that's on me it's a calculated and obvious risk.

              Not being able to kick someone who isn't paying out is lunacy.

              I totally understand putting a 6 month hold on things to get us through this but all parties need to be considered here, not just the tenants.

  • chumlee on 30/03/2020 - 22:13
    +1

    Look for a loophole.

    No eviction but can you give notice that you are moving in and therefore tenant has 90 days to move out?? I'm not sure if this is possible but you need to find the loophole fast

    • Trops on 30/03/2020 - 22:49
      +6

      We’re calling our agent weekly to get an update otherwise we hear nothing from them. First thing we’re considering once we get through the next 6 months is change the agent.

      • Mechz on 31/03/2020 - 02:06
        +10

        Do you really think any other agency will be able to get blood from a stone?

        • markathome on 31/03/2020 - 06:57
          +21

          I doubt it but I get the feeling this is yet another situation where a direct connection with the tenant would have benefited the landlord.

          Either:

          • The tenant has a don't-give-a-damn attitude that the landlord might have picked up on in a personal interaction, or,
          • The tenant is alright and struggling and would negotiate a lowered rent face-to-face but is just ignoring the property agent.

          As a tenant, property agents aren't really a joy to interact with, they cost everyone money, stifle communication and aggravate situations. OP chose to go with a property agent and that made his investment higher risk.

          This leads to my idea. Write or drop the tenant a letter. Maybe sneak it under the door given they may be ignoring the letterbox. Say something like, "I'm the landlord and I'd love to talk with you about a better deal for us both, here's my number…"

      • elgrande on 31/03/2020 - 08:34
        +2

        Good idea, your agent should have sorted this sooner.

      • legendary-noob on 31/03/2020 - 14:33
        +3

        to be frank, i dont think its the agent's fault.
        my agent told me they are suffering as well as all the request for rental reduction meant more work for him, less revenue from landlords, and having to put up with sh*ts from both parties.

        i think the tenant here is the culprit.
        regardless of what people say about financial difficulty, the least one could do now is communicate.
        just going on radio silent just implies tenant trying to exploit the situation

    • chunksandwich on 01/04/2020 - 08:12
      +1

      Oh sure, this obviously gives the landlord the moral highground. Lying to illegally evict a tenant.

  • AdosHouse on 30/03/2020 - 22:18
    +11

    Schedule an inspection. Just happen to need about 6 bikie looking blokes to do an inspection.

    • Trops on 30/03/2020 - 22:50

      Yea will definitely push for this. Last inspection was prior to xmas

      • LuffyTuffyFluffy on 30/03/2020 - 23:38
        +16

        Don't think that'll be possible with the restricted movement, and it may not fall into the essential list.

        • peterpeterpumpkin on 31/03/2020 - 09:06
          +18

          Yeah, it's 2 bikies at a time now. 1.5m apart at all times. Important to wear gloves to keep fists clean, and use other common sense.

          I'm assuming they're coming to inspect a collection of second-hand jigsaw puzzles for their isolated loved ones?

    • bdl on 30/03/2020 - 23:36

      I can recommend one, PM if interested. Do you have landlord insurance at all?

      • gitl on 31/03/2020 - 23:53

        Landlord insurance cannot come into effect for rent-owing in arrears until the tenant actually vacate …?

    • LFO on 31/03/2020 - 17:23

      Social distancing applies.
      No good.

    • knk on 31/03/2020 - 17:25

      My property manager has suspended all inspections for the time being lol….so there goes that idea.

    • AustriaBargain on 01/04/2020 - 08:14

      And if those blokes places all his possessions outside on the curb, and then stood around while you changed all the locks, what is he going to do about it exactly.

    • bargaingod123 on 01/04/2020 - 11:27

      1 bikie looking to not break the law

  • [Deactivated] on 30/03/2020 - 22:41
    +1

    Have they been served a 14 days' notice to vacate the property in writing? When was the application for a possession order lodged with VCAT?

    • Trops on 30/03/2020 - 22:52
      +3

      Notice to vacate issued 11th March

      VCAT hearing scheduled 3rd april

      • Drakesy on 30/03/2020 - 23:53
        +9

        Looks like this predates the government's policy, you may have a leg to stand on, unless they come up with change in financial circumstances due to COVID-19, then it'll make it difficult.

        • chumlee on 31/03/2020 - 06:16
          +4

          May pre date government announcement but vcat may rule against eviction due to lockdown & hardship

  • NotaSpender on 30/03/2020 - 23:20
    +2

    https://www.reddit.com/r/AusFinance/comments/fr2f4r/6_month_… you should read this reddit post OP

  • SmiTTy on 30/03/2020 - 23:30
    -7

    Can u cancel water and electricity services? (if you're the one paying for it)

    • [Deactivated] on 31/03/2020 - 00:23
      +5

      That would be illegal.

    • Mechz on 31/03/2020 - 02:08
      +3

      Do you even live in Australia? No (or none in the 20 years I've rented) pay for these.

      • [Deactivated] on 31/03/2020 - 02:48
        +1

        In WA the excess water bill still goes to the property owner and is still in the owners name.

        • markathome on 31/03/2020 - 07:03

          Yes. But Water Corp won't treat it as the tenant's problem they'll just treat it as any other debt in the owner's name.

      • SmiTTy on 31/03/2020 - 08:53

        Landlord for QLD, and I have to pay for water in my situation

      • Cyphar on 31/03/2020 - 21:03

        In VIC, tenants are responsible for all services. I just pay the rates. Tenants cover their own gas, power & water

  • screensaver on 30/03/2020 - 23:30

    sounds like you could be okay, the order from govt may not grandfather exisitng eviction processes

    • bobbified on 31/03/2020 - 00:16
      +18

      Renters live cheaply compared to home owners with a mortgage, all this time they should have savings set aside.

      I don't think so. If it were simply a case that tenants live cheaper, everyone would just be renting. There's more to it than just the money and there's both advantages and disadvantages of being the tenant or landlord. What's best for you depends on your own circumstances. A shitty situation like this highlights some of those As and Ds on both ends.

      • Jugganautx on 31/03/2020 - 12:47
        +2

        2nd this, My mortgage is only 210 a week. Way cheaper than if i was renting in my area.

        • Some Guy on 01/04/2020 - 15:29
          +1

          Then move out and get some tenants!

    • MeesusEff on 31/03/2020 - 01:05
      +10

      I find that its so moronic that they can state that they cant be evicted for not paying rent, yet allow the banks to capitalize on our interest during the freeze. Way to double the blow for landlords. Not like we can stop paying the water and council rates for the place either .

      • tsunamisurfer on 31/03/2020 - 01:20
        +4

        Even if there was a freeze the tenants can just up and go at the end of the lease with 6 months in arrears and there would be no recourse for the landlord.

        This is 100% geared towards screwing over the landlord to appease the masses.

        • MeesusEff on 31/03/2020 - 04:08
          +1

          I would hope that would be liable to pay back the rent? Unless they want to file bankruptcy or stay forever on Jobseeker, enh, even the Jobseeker rate looks pretty good to me now considering its higher than the rent i charge - which is my sole income for now.

          • jowu15 on 31/03/2020 - 15:13

            @MeesusEff: I was a property manager n have been in business for more than 20 years. I have many VCAT order to order tenant to pay rent arrears but once they moved out, no one ever pays. I paid for Sheriff a couple of times, didn’t get anything. Tenancy law is too in favour of tenant

            • MeesusEff on 31/03/2020 - 15:47

              @jowu15: May I ask if those people were of some sort of professional white collar backgrounds? I wouldn't think that they'd like this to follow them. Would it also have a flow on effect on their ability to rent via property managed rentals?

          • knk on 31/03/2020 - 20:23
            +1

            @MeesusEff: Liability vs actually being able to get the money are 2 different things. In practice when someone needs to be evicted chances are you're not getting your money.

            This just extends the pain and screws over landlords. Anyone who says anything different lives in a bubble.

        • Typical16-bitEnjoyer on 31/03/2020 - 09:22

          An investment property is exactly that - an investment. Investments involve risk. Not all investments increase in value.

          • kev98 on 31/03/2020 - 21:52

            @Typical16-bitEnjoyer: While true, the game just changed in a major way for any tenant who wants to make life difficult for their landlord

          • wilko23 on 31/03/2020 - 21:56
            +4

            @Typical16-bitEnjoyer: An investment property is an investment and can drop in value sure… But The tennancy agreement is something entirely different - it's not an investment its a contract.

            Ive got 2 investments and I rent for my own home because i cant afford Sydney. My tennants in Brisbane both lost their jobs last week and Im happy for them to stay and pay what they can. My other one the tennant has come out and siad he can only pay half rent now. WHat can i do? nothing. At the same time i received a notice from the real estate of the property i rent saying "We hope you are safe in these trying times. During this time, you are still required to pay your rent as per your lease agreement. The legislation has not changed on this."

            We have some limited savings to take some of the hurt but not to cover 6 months. I dont even know what is right, i guess im just going to have to try and claim land lord insurance on one, the couple are from Italy so not entitled to any benefits apart from accessing their paltry super balances. I feel for them as they cant exactly just go home right now, so im happy to let them feel comfortable and just do their best, but im essentially sponsoring them.

            • Typical16-bitEnjoyer on 02/04/2020 - 09:23

              @wilko23: It still is a contract. You still have and can avail yourself of all the rights under that contract. Your problem is the contract terms cannot be met due to a global pandemic that is absolutely no fault of the tenant.

        • robbyjones on 31/03/2020 - 12:31

          It is still a debt that the renter incurs and can be chased in the usual ways.

      • ripesashimi on 31/03/2020 - 14:11

        Home isolation and eviction contradict each other.

    • chumlee on 31/03/2020 - 06:23

      Isn't the fed government working on rental assistance as there next bail out program?

      Morrison doesn't want to upset baby boomers and their entitled lifestyle. The franking credits caused him enough grief from boomers.

      This government will ensure losses are socialised so we can get through this and gains can be privatised again whilst the middle class pay back the national debt

    • jimbobaus on 31/03/2020 - 10:12
      +1

      Mate, you have no idea.
      This is the most deluded post i have ever read in my life.

      I am a landlord.. and a tenant (yes i rent) and you have no grip on reality if you think any of what you wrote is true or legal

    • ripesashimi on 31/03/2020 - 14:08
      +1

      Call the Agent and put a freeze on all maintenance on the property.

      You are suggesting OP breaking a law. I bet your agent will drop you as soon as you suggest this since they would have to breach the Property, Stock and Business Agents Act 2002 per your instruction.

    • Belts on 01/04/2020 - 00:03

      Whoa whoa whoa…calm down, Satan

  • Trops on 31/03/2020 - 00:06
    +7

    At the moment, what i am gathering is that the moratorium applies to those who are facing financial difficulties due to covid-19

    “ The announcement, made in conjunction with state leaders, would prevent landlords from evicting tenants if they are unable to pay rent due to financial distress as a result of the COVID-19 pandemic. “

    If the tenant’s issue (he is not communicating with us hence i don’t really know what the real issue is) is not be related to covid-19, does that translate to the moratorium need not be applied?

    Best way forward is for him to speak to us….

    • kingsville on 31/03/2020 - 15:26
      +1

      REIV sent a message saying the moratorium in Vic only applies to commercial property

  • me786 on 31/03/2020 - 00:18
    +7

    Tenant is taking advantage of COVID situation. They purely don't have any intention to pay. They will occupy the property for free as long as possible.
    Prepare for bigger damage bill after they leave.
    The agent will not be helpful as they have realized the consequences beforehand.
    Very frustrating situation under govt supervision.

  • Almost Banned on 31/03/2020 - 00:54
    +5

    Landlord insurance?

    • cmerj on 31/03/2020 - 23:12
      +1

      Agree. This is literally the reason you get insurance.

  • MeesusEff on 31/03/2020 - 01:01
    +8

    Our property manager emailed us, it seems like the tenants have to fulfil certain conditions in order to fall under the Eviction Moratarium? Or I bloody well hope so anyway. So tired of seeing all the 'landlords get mortgage freeze so Ill stop paying rent' posts on facebook.. Excerpts from the email below, but your case sounds like its the pre-Covid situation so you might have some success.

    **
    When we receive a call from a tenant that may be impacted, we have a process that is needed to be followed for a discussion with our Owners to occur. This process includes among other things confirmation that their employment has been terminated, are they still receiving annual leave, have they applied for Government support, total household income and expenses and how much rent can they currently afford to pay.

    It is important that this relief is given only in circumstances where financial hardship is in place and not where a tenant’s financial situation has not changed. This is in line with the direction given from the Government that we apply assistance to where it is needed most.

    Unfortunately, we have been advised that our State or Federal Government may introduce that no tenancy terminations will be allowed and therefore this could impact the terms of the policies in place.

  • ProlapsedHeinous on 31/03/2020 - 03:06
    +14

    I don't have anything to say except sorry that you're in this situation, and i hope it all works out for you.

  • Euphemistic on 31/03/2020 - 05:28
    +2

    Talk to your mortgage provider. Keep them informed, they may be able to reduce/freeze your payments. Talk to landlord insurance provider too.

    We are in uncharted waters with this virus. Right now everything is changing rapidly and there may be unforeseen consequences of the air out packages - like tenants not paying rent ‘because they can’. Keeping communication with your mortgage provider will be important. Everyone is suffering.

  • capslock on 31/03/2020 - 06:27
    +1

    I think the unfortunate reality is that you will have to put this issue on hold for 6 months and then after that continue with the eviction process.

    The government had good intentions for the benefit of the country but there will always be people out there who will take advantage for their own personal benefit.

  • sparkles on 31/03/2020 - 07:19
    +11

    Tenants who decide to stop paying rent (because they can) will be in all sorts of pain once these moratoriums are lifted. Because landlords will simply evict them en masse. If you can, continue to pay your rent, don't be the a**hole. Too many people are looking for ways to shaft other people at the moment.

    • trapper on 31/03/2020 - 11:41
      +5

      They still walk away with over $10k+ in free rent.

      For a lot of people of low moral fibre that is absolutely worth it, even with the hassle of eventually being evicted.

      • zealmax on 31/03/2020 - 11:55
        +1

        Doesn't look good on your rental records. I don't think any new landlord will rent out to a potential tenant that hasn't paid rent for 6months and got evicted.

        • trapper on 31/03/2020 - 13:23
          +1

          Some people just don't care.

          They already do this just for one or two months free rent while you struggle to get them out.

        • Boogerman on 31/03/2020 - 13:41

          There are ways around a rental record

          • RPGPlayer on 31/03/2020 - 14:54

            @Boogerman: Is there? Care to share?

            • Boogerman on 31/03/2020 - 15:15
              +2

              @RPGPlayer: Organise a friend to ‘act’ as the previous landlord to provide the verbal phone reference

        • ripesashimi on 31/03/2020 - 16:25
          +2

          Heaps of agents do not bother with rental records. Simply put, introducing a tenant (which later turns out is shit) looks way better than the failure to recommend any tenant. You have 2 months before the landlord employs a more competent agent. Also, landlords often do not pay enough for their agents to do the due diligence for you.

          Lets not forget heaps and heaps of verbal agreements on gumtree or in some communities (Chinese and Indian specifically).

          • [Deactivated] on 31/03/2020 - 17:34

            @ripesashimi: Are rental records a state by state thing, or is there a national register?

          • SlickMick on 31/03/2020 - 17:38
            +1

            @ripesashimi: If there are agents out there like that, I don't know how they're still in business.

            I was thinking they might do better checks than I can myself.
            I require evidence of rent paid on time for previous 6 months. A phone call wouldn't cut it for me.

      • KozieSeller on 31/03/2020 - 18:14

        Looks like there are potential scammy a**holes lurking in your comments already, trying to get out of a rental record

  • OzRolla on 31/03/2020 - 07:40

    I feel sorry for you OP. This kind of stuff happens too often and the landlord is usually the one getting screwed over. Try calling VCAT or as one other person suggested, move into the property for a period of time.

  • Dbargain4me on 31/03/2020 - 07:54

    My question is what happens with the fees you pay the real estate agent for looking after the property as in inspections etc . If they are not paying rent do they still get paid ? If not surely the agents will stop doing the inspections.
    I don't get why the government has not put a freeze on land rates as well ?

    • MrHyde on 31/03/2020 - 09:03

      Shouldn't be paid. Those fees are a percentage of rent received. If not rent received; any percentage of 0 is still 0.

      • trapper on 31/03/2020 - 11:38

        Depends on your contract.

        • Hangryuman on 31/03/2020 - 12:13

          most rental agents charge 1 weeks rent as letting fee - so in the absence of much rent they'd probably be looking to relet - except in this extraordinary time with a possible no evictions rule and dodgy tenants playing that for all it's worth it will probably be hard to actually evict anyone who's even pretending to be suffering hardship.

          spread the pain - keep good records of each contact - date/time/content - for tribunal if/as necessary

          negotiate on a short term basis - review after 1 month - don't let tenants fall into - oh, I don't need to pay rent ever again - keep communications open and frequent.

          as others suggested, talking directly with the tenant may improve things - start by asking them what's happening - listen, clarify everything, suggest ideas for them, then ask what they're thinking to do - often it will be heading for cheaper remote places for the duration

  • firebucket on 31/03/2020 - 09:32
    +3

    Now that the Govt is paying a $1500 "Job Keeper" allowance - surely we should see less of the "I lost my job. Now I can't pay any rent". They should pay a pro-rata amount.

  • jimbobaus on 31/03/2020 - 10:10

    Was your application to evict lodged before "March 30th 2020"
    Under the current guidelines my agent believes that if you already had an eviction in process prior to 30/3 then you can still have them evicted.
    As a landlord we need to be understanding etc , but given your situation i would have your agent continue with eviction proceedings if you are eligible.
    Saying that, no one is moving house at the moment so you are unlikely to get any new tenants for some time.

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