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If you or a member of your household has been financially impacted by the Coronavirus, it can be a challenging time figuring out how you are going to make ends meet. So, what benefits apply to renters and how should you approach a landlord to discuss a potential rent reduction?
Households across Australia are facing a time like no other, perhaps you have found yourself out of work, have reduced hours or you or a partner are now working from home. You may find income coming in simply doesn’t cover your living expenses and you’re not sure where to start or perhaps you simply want to ensure you’re putting yourself in the best financial position possible during this time.
Where to start
The most important thing you can do is to get clear about what your expenses are and what you have coming in so you can figure out how much of a shortfall you have. Although creating a budget can be time-consuming, it is a great tool to set up for now and into your future. You will also be able to use it to identify how much you can physically afford to pay in rent and potentially use it as a tool to manage any negotiations with a landlord. Read our article on where to start when dealing with financial hardship.
You may also find our Action Plan checklist helpful which ensure you’ve covered every potential option when covering a financial shortfall.
Download your action plan here.
Understand how a financial adviser can support you with your need for financial security. Get in touch.
Benefits for renters
On top of benefits for individuals such as JobKeeper or JobSeeker benefit payments for those whose employment or income has been impacted by the pandemic, the Government has also released additional benefits for renters. You can read more about the benefits currently available during COVID-19.
In late March the Australian government announced a moratorium on evictions over the next 6 months for tenants who have arrears due to financial hardship (have lost 25% or more of household income). If you find yourself in the situation where your household income has reduced by 25%, you must notify your landlord or rental agency to negotiate a variation on your normal rental terms. You will not be backlisted during this period. You can find the flow chart on terminations due to arrears here. For tenants who simply refuse to pay without negotiating will face normal eviction processes.
Landlords are also offered a 25% discount on land rates during this period. For landlords to be eligible for this discount they must pass the amount on to their tenants.
During this period landlords must also be open to discuss a potential rent reduction.
Handling negotiations with a landlord
Review your situation first
Before entering a negotiation, it is important to review your situation first
Adjust your budget according to any new payments/ reduced expenses
By being clear of your own situation you will be able to communicate with your landlord exactly what you can afford to pay.
Understand their position
Every landlord will be in a different financial position and may not be entitled to the same benefits, although landlords are encouraged to reduce rent during this time, it is not mandatory. It’s important to remember your rent may be their only income. You can read more on benefits available to landlords here.
Be considerate and as clear as possible
Everyone is facing this time of uncertainty together; be considerate as your landlord may have financial pressures of their own. By being as clear as possible about your financial position and what you can afford to pay each week it will not only make negotiations clearer but it can help you both work out a path forward for the future.
What to do if you can’t reach an agreement
If you can’t reach an agreement with your landlord or simply know you are not going to be able to pay your rent you can ask a third party such as Fair Trade to assist in reaching an agreement. If you are facing financial hardship you are still able to break a lease during this time.
For best practices, it is best to email or have some form of written evidence to demonstrate that you have tried to negotiate your rent amount with your landlord. If you have a conversation over the phone you may choose to send a follow-up email outlining the points covered in the phone call and how you would like to move forward.
It’s important to remember during this time of uncertainty there is various support and options available to you. Managing stress and a healthy mindset should also be front of mind for not only yourself but also others you think may be struggling.
If you would like to discuss your financial situation, we are happy to assist. Contact us today.
What you need to know
This information is provided by Invest Blue Pty Ltd (ABN 91 100 874 744). The information contained in this article is of general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regards to those matters and seek personal financial, tax and/or legal advice prior to acting on this information. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relations to products and services provided to you.
