Six-month moratorium on residential tenancy evictions announced in NSW

On 13 April, the NSW Government announced a six-month moratorium on evictions for tenants in financial hardship as a result of the COVID-19 crisis.

The announcement forms part of a $440 million COVID-19 relief package, half of which ($220 million) will support residential renters and landlords with the remainder supporting commercial landlords. The package also includes $2.3 million dollars to support tenants' advocacy services to cope with increased demand.

The moratorium is being implemented in NSW in two stages. From 15 April, there is an interim 60-day stop on landlords seeking evictions for rental arrears, where the renting household has been financially impacted by COVID-19. This is followed by a longer six-month restriction on rental arrears evictions for households experiencing financial disadvantage as a result of COVID-19.

The moratorium is underpinned by an expectation that landlords and tenants negotiate together about reducing, waiving or deferring repayments until the COVID-19 crisis is over.    

A landlord is required to negotiate on rent reduction with the tenant in good faith in the first instance, and can only seek to give a termination notice or apply for an eviction after the interim 60-day stop if formal negotiations have broken down. As has always been the case, tenants cannot be evicted without an order from the NSW Civil and Administrative Tribunal (NCAT).

This essentially means that tenancies can still be terminated for rental arrears caused by COVID-19 if it appears that the negotiation process has been undertaken in good faith, and the tribunal makes a decision that it is fair and reasonable in the circumstances of the specific case.

Along with these restrictions on evictions for rental arrears, the Government has extended the notice periods for certain other lease termination reasons to 90 days.

Eligibility

To meet the requirements for a 60-day stop on evictions and the longer six-month restrictions, a household needs to demonstrate they are impacted by COVID-19.

A household is COVID-19 impacted if:

  1. one or more rent-paying members of a household have lost employment or income (or had a reduction in employment or income) due to COVID-19 business closures or stand-downs, or
  2. one or more rent-paying members of a household have had to stop working or reduce work hours due to illness with COVID-19 or due to COVID-19 carer responsibilities for household or family members, and
  3. the above factors result in a household income (inclusive of any government assistance) that is reduced by 25% or more. 

Important points to note:

  • Tenants will be protected from an eviction until the NSW Civil and Administrative Tribunal (NCAT) is satisfied that appropriate negotiations have been reached, but unpaid rent will continue to accrue during this period.
  • All tenants who are not impacted by COVID-19 are expected to honour their existing tenancy agreements including paying all rent and charges in full.
     

An end to all evictions?

Acting team leader of RLC’s Inner Sydney Tenants’ Advice and Advocacy Service, Ned Cooke says that while the changes are welcome, more needs to be done to protect vulnerable tenants.

“While we welcome these changes as a step in the right direction, we think they do not go far enough to protect renters. Many people in NSW are still falling through the cracks.

“The government announced a six-month moratorium on rental arrears evictions for COVID-19 affected households, but what has been delivered is actually only a 60-day ban on those evictions. After that time, landlords can still seek termination."

Cooke is concerned that a lot of faith appears to have been placed in the idea that landlords and tenants will be able to negotiate around the shortfall in rent. He says this "fails to take into account the major imbalance in bargaining power between landlords and tenants," and calls for greater guidance to ensure fairer outcomes for tenants.

“There is a perception out there that landlords will eventually get all of their rent back from their tenants. But a landlord negotiating in good faith should be offering a rent reduction or waiver, not just a deferral of the payment. Guidelines need to be published making it clear what is expected of both landlords and tenants during the negotiation process.

“We expect to see an increase in ‘no grounds’ terminations where the real issue is the tenant’s ability to meet rent payments. The extension of termination notice periods is a positive move, but tenants need a stronger basis to be able to dispute these notices," Cooke said.

"Many people in informal renting arrangements will not be protected from evictions at all. Young people, international students, people from overseas, and people on low incomes are especially at risk of losing their housing.

“Finally, it is also extremely disappointing that the public and community housing providers are still pursuing evictions during this crisis," Cooke concludes.

"Social and community housing tenants are among the most vulnerable in society and evictions often lead to homelessness. At a time when government is taking extraordinary measures to keep people in their homes, the social housing sector has a clear responsibility to suspend or cease all eviction action immediately.”

Sources and further info:

Fair Trading NSW (media release,13 April 2020)

Can my landlord evict me during this crisis? (Tenants' Union of NSW)

The NSW evictions moratorium: an explainer (Tenants' Union of NSW, 15 April 2020)