UPDATE ON CHANGES TO RESIDENTIAL TENANCY PROCEDURES IN QLD DUE TO COVID19
On 25 April 2020, the Regulations under the Covid-19 Emergency Response Act 2020 were introduced.
The regulations dictate what is to occur in a tenancy when a COVID-19 event takes place. Essentially, the Regulations are based upon a tenant suffering excessive hardship because of the COVID-19 emergency. They therefore do not apply to tenancies where it cannot be shown that excessive hardship exists because of the COVID-19 emergency.
Excessive hardship is fairly clearly defined. A person suffers excessive hardship because of the COVID-19 emergency if, during the COVID-19 emergency period.
- They or someone they care for suffers from COVID-19.
- They are subject to a quarantine direction (one requiring a person to stay at a place for a stated period in isolation).
- A public health direction has closed their employment or restricted their employer’s trade or business, including for example a public health direction that has closed a major supplier or customer of their employer (examples of public health directives where an employer’s trade or business has closed are such things as bars, clubs, hotels, restaurants, cinemas etc).
- They are self-isolating because they are a vulnerable person, live with a vulnerable person or is the primary carer for a vulnerable person ( a vulnerable person is an individual over 70 years of age, an individual over 65 years who has an existing health condition, an Aboriginal or Torres Strait Islander over the age of 50 years who has an existing health condition and/or and individual whose immune system is compromised).
- They are unable to work because a travel restriction imposed under a public health direction prevents them from working or returning home
- They have been prevented from leaving or returning to Australia,
- The person suffers a loss if income of 25% or more
- The rent payable by the person is 30% or more of the person’s income.
ESSENTIALLY THE TEST IS TWO FOLD:
- THE PERSON MUST FALL WITHING ONE OF THE CATEGORIES LISTED ABOVE;
- THE FINANCIAL TEST OF LOSS OF INCOME OR RENT BEING 30% OR MORE OF THE PERSON’S INCOME.
If there is more than 1 tenant, then while only 1 person need be a person whom falls into the categories listed above, the financial tests will be that there has been a 25% or more reduction in the combined total income of all tenants or the rent payable under the agreement is 30% or more of the combined total income of all of the tenants.
IF NONE OF THE CRITERIA ABOVE ARE MET, THEN THE REGULATIONS DO NOT APPLY TO THE TENANCY.
The regulations refer to the COVID-19 emergency period. That period is specified as being from:
29 MARCH 2020 – 29 SEPTEMBER 2020
Unless the emergency status is withdrawn sooner.
CONSEQUENCES FOR TENANCIES THAT DO MEET THE CRITERIA
A tenant cannot be evicted for failure to pay rent if the failure relates to the tenant suffering excessive hardship because of the COVID-19 emergency.
For all other scenarios, there is nothing to stop a landlord from issuing a Notice to Leave if it is for any other reason other than failure to pay rent or if it is for failure to pay rent for a tenancy which does not meet the excessive hardship tests set out above.
The term ‘eviction’ has however been given a wide definition:
It now includes:
- Give the tenant notice to leave;
- Applies to QCAT for an Order terminating the tenancy;
- Coerces the tenant into ending the agreement;
- Prevents the tenant from freely accessing the premises by, example, changing the locks or withdrawing utilities;
- Causing the tenant to vacate because of false or misleading information given to the tenant by the lessor or another person on behalf of the lessor;
- Causing the tenant to vacate because of acts of intimidation carried out by the lessor or another person on behalf of the lessor.
NOTE: BREACHES OF THE REGULATIONS MAY CONSTITUTE AN OFFENCE. DEALINGS WITH TENANTS DURING THIS PERIOD SHOULD BE DOCUMENTED WITH AN EXTREMELY HIGH DEGREE OF ACCURACY. WHERE POSSIBLE COMMUNICATIONS SHOULD BE IN WRITING. IF VERBAL, CONTEMPORANEOUS NOTES SHOULD BE KEPT.
EXTENSIONS TO RESIDENTIAL TENANCY AGREEMENTS
If a tenancy agreement ends on or before 29 September 2020, then unless the agreement ended before 29 March 2020, or before that date a Notice to Leave was issued by either the tenant or the lessor, or an application was made to the Tribunal for termination of the tenancy, the Lessor MUST, if the tenant is suffering excessive hardship because of the COVID-19 emergency, OFFER the tenant an extension of the lease to 30 September 2020 or an earlier date requested by the tenant.
If the tenancy is extended, then it will continue on the same terms as the existing agreement.
No costs are payable by the tenant for the extension.
NOTE 1: AGAIN THIS ONLY APPLIED TO A TENANCY AFFECTED BY THE COVID-19 EMERGENCY AND NO OTHERS AND THE COVID-19 TESTS ARE MET.
NOTE 2: THERE IS NOTHING TO SUGGEST THAT AN AGENT WOULD BE ENTITLED TO ANY FEE FROM A LANDLORD UNDER A MANAGEMENT AGREEMENT FOR THIS EXTENSION.
NOTE 3: THE REGULATION IS UNCLEAR WHAT HAPPENS IF THE EXCESSIVE HARDSHIP TESTS NO LONGER APPLY TO THIS TENANT BECAUSE OF, FOR INSTANCE, GOVERNMENT STIMULUS GRANTS, JOBKEEPER PAYMENTS OR RELAXATION OF RESTRICTIONS.
UNPAID RENT – SHOW CAUSE NOTICE
If rent payable has remained unpaid for at least 7 days AND the lessor knows, or ought reasonably to know, the tenant is or has been suffering excessive hardship because of the COVID-19 emergency, the lessor MUST NOT give the tenant a notice to remedy breach but may give the tenant a show cause notice for the unpaid rent.
If the tenant is given a show cause notice, the tenant then has 14 days to do either of the following:
- Pay the unpaid rent;
- Inform the lessor the rent is unpaid because the tenant is suffering excessive hardship because of the COVID-19 emergency.
If the tenant does neither, then the lessor may then issue a notice to remedy breach for the unpaid rent.
If the tenant does respond to the show cause notice informing the lessor that rent is unpaid because the tenant is or has been suffering excessive hardship because of the COVID-19 emergency, the lessor may then request the tenant to enter into a tenancy variation agreement.
The show cause Notice has now been published on the RTA website.
TENANCY VARIATION AGREEMENTS
If the tenant and the lessor agree to a rent reduction, it must be documented, (Form 18D on the RTA website). It must state the rent reduction and must state the time agreed to. The form must be signed by each tenant and the lessor.
NOTE: SO THERE CAN BE NO DOUBT IT IS SUGGESTED THAT AN AGENT ENSURE THAT THE LESSOR(S) PERSONALLY SIGN THE VARIATION FORM.
If the lessor and tenant agree to a rent reduction and this is contained in a variation agreement, the rental payable under the tenancy at the end of the variation agreement, cannot be more than the rent which was required to be paid before the tenancy variation agreement started.
NOTE: THERE HAS BEEN SOME SUGGESTION THAT THE EFFECT OF THIS REGULATION IS TO ENSURE THAT A LESSOR DOES NOT TRY TO ‘CLAW BACK’ THE RENT REDUCTION BY REQUIRING THE TENANT TO PAY AN INCREASED AMOUNT AFTER THE TENANCY VARIATION AGREEMENT HAS ENDED. IT IS UNCLEAR WHETHER THIS IS THE CASE. THE APPROVED TENANCY VARIATION AGREEMENT HAS IN IT PROVISION FOR SPECIAL TERMS. IT IS NOT BEYOND COMPREHENSION THAT THIS SPECIAL TERM COULD MAKE PROVISION FOR THE TENANT TO ‘REPAY’ AND RENT DEDUCTION AT THE END OF THE TENANCY VARIATION AGREEMENT, NOT AS RENT PER SE.
CONCILIATION OF DISPUTES ABOUT UNPAID RENT
If the lessor has requested the tenant enter into a tenancy variation agreement and the lessor and tenant are unable to agree to the terms of the variation, either party may make a dispute resolution request.
There is now a specific COVID-19 dispute resolution request (Form 16A).
If the parties cannot reach an agreement at conciliation, then either party can apply to QCAT for an order about the unpaid rent.
EVIDENCE OF SUFFERING EXCESSIVE HARDSHIP
If a tenant claims to be suffering from excessive hardship because of the COVID-19 emergency, the lessor may require evidence from the tenant to support the claim, similar to the information which may be required when a tenant enters into a tenancy agreement.
NOTE: THE REGULATION GIVES EXAMPLES SUCH AS A SEPARATION CERTIFICATE, A CENTRELINK STATEMENT OR A MEDICAL CERTIFICATE. WITH RESPECT TO THE DRAFTERS OF THE LEGISLATION THIS DOES NOT ADDRESS THE MOST IMPORTANT ASPECTS OF THE TEST, NAMELY THE INCOME TEST AND THE ABILITY TO PAY RENT. IT IS SUGGESTED THAT IT GOES WITHOUT SAYING THAT AS THE EMERGENCY TEST DOES RELATE TO INCOME AND FINANCIAL CIRCUMSTANCES, THAT IT WOULD ONLY BE REASONABLE FOR THE LESSOR TO REQUEST FINANCIAL DOCUMENTS FROM A TENANT. OBVIOUSLY BANK STATEMENT ARE SUCH DOCUMENTS.
HOWEVER, IT MUST BE REMEMBERED THAT THE FINANCIAL TEST FOR THE EMERGENCY ONLY RELATES TO SUFFERING AN INCOME LOSS OF 25% OR MORE OR THE RENT BEING MORE THAN 30% OF THE TENANTS INCOME.
Similarly, if the matter has progressed to Dispute Resolution with the RTA, the RTA can itself request evidence from the tenant that the tenant is suffering excessive hardship because of the COVID-19 emergency. Normally information gathered during a conciliation hearing is protected, however in this case an exception is provided in that the RTA, if it has requested evidence, can after receiving that evidence advise the Lessor whether the RTA is satisfied that the tenant is suffering excessive hardship.
A specific provision is included whereby if the tenant has informed the lessor that he/she is suffering excessive hardship because of the COVID-19 emergency, and the tenant’s circumstances change whereby he/she is no longer suffering excessive hardship, the tenant must, as soon as reasonably practicable after the change in circumstances, inform the lessor of the changes circumstances.
NOTE: ‘REASONABLY PRACTICABLE’ IS A VERY LOOSE TERM AND IS OPEN TO A WIDE RANGE OF INTERPRETATIONS. THE AMENDMENTS WOULD HAVE BEEN MORE CERTAIN IF THEY REFERRED TO A SET PERIOD OF TIME (EG 7 DAYS). THE AMENDMENTS DO NOT MAKE IT CLEAR WHAT OCCURS IF THE TENANT ADVISES OF THE CHANGE IN CIRCUMSTANCES – IE CAN THE TENANCY BE TERMINATED EVEN THOUGH IT HAS BEEN EXTENDED, DOES ANY VARIATION AGREEMENT LAPSE, DOES ANY AGREEMENT TO REDUCE RENT ALSO LAPSE? UNFORTUNATELY THESE ARE QUESTIONS THAT ARE LEFT OPEN AND ULTIMATELY WILL LEAD TO UNCERTAINTY AND DISPUTES.
It a tenant is alleging excessive hardship because of the COVID -19 emergency, the tenant cannot apply to QCAT for a termination order unless (a) the tenant has made a dispute resolution request to the RTA and (b) the parties are unable to reach an agreement.
QCAT may only make an Order if it is satisfied that the tenant has satisfied it that the tenant is or has been suffering excessive hardship because of the COVID-19 emergency.
QCAT have published a Practice Direction dealing with these applications which is: