When should this letter be used?
· All landlords must be prepared to negotiate rent payments with tenants who are impacted by the Coronavirus (COVID-19) pandemic. This means where:
o One or more rent-paying members of a household have lost or reduced income due to COVID-19 business closures or stand-downs; or
o 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
o The matters above result in a reduction in the household income inclusive of any government assistance of 25% or more.
· Tenants can formally request a rent review on the basis that they are affected by COVID-19.
· Tenants who have lost income due to COVID 19 should make a genuine attempt to negotiate with the landlord to reduce rent to whatever level they can afford. Landlords should engage meaningfully and in good faith.
· A landlord will only be able to give a termination notice or apply for an eviction after the interim 60-day stop, if they have tried to negotiate a rent reduction with the tenant in good faith and if seeking a termination is fair and reasonable in the circumstances of the specific case.
· You can use the attached template letter to respond to a tenant’s initial request to waive or reduce rent payments.
· Landlords are entitled to request basic supporting documents from the tenant to support the claim that a tenant is impacted by COVID-19, for example:
o proof of job termination/stand-down or loss of work hours
o proof of Government income support
o proof of prior tenant income.
· Landlords are encouraged to approach their financial institutions to seek a mortgage freeze or reduced repayments as part of the negotiation discussions (see more information below).
· Make sure you keep evidence documenting your financial arrangements, and communication you’ve had with your lender to waive or reduce your repayments.
· All agreements with the tenant should be in writing, making a note of whether the arrears will be waived or repaid once the tenant resumes their normal employment.
What should the letter to your tenant include?
Your financial situation
We encourage you to be open and honest about your financial situation with your tenant, including whether you rely on the rental income to cover mortgage repayments or other expenses.
Your conversations with your lender
Landlords are encouraged to approach their financial institutions to seek a mortgage freeze or reduced repayments. In your response to your tenant, outline the result of conversations you’ve had with your lender about waiving or reducing your own mortgage repayments.
Rent payment that you would be able to accept
A tenant who is COVID-19 impacted but also receives work income and Commonwealth support is expected to continue to make a reasonable contribution to rent in line with what they can reasonably afford. If you are able to accept a reduced or waived rent payment for a temporary period until your tenant resumes normal employment arrangements, including through repayment deferrals genuinely sought from your bank or through other means, clearly outline the revised offer in your response, including reasons.
Clarify rent waived or propose a post-COVID-19 repayment plan
Clarify whether the rent payment loss (arrears) will be waived or repaid under a repayment plan once the COVID-19 emergency is over or the tenant resumes employment.
Template letter
Your Name
Your Address
Date
Tenant Name
Their Address
Response to request to negotiate rent payments due to COVID-19
Dear [Mr/Mrs/Ms Tenant’s name]
Thank you for contacting me about your [weekly/fortnightly/monthly] rent payments for [property address].
I understand your financial circumstances have changed due to COVID-19, resulting in an impact on your income of 25% or more. I would therefore like to discuss your request to reduce your rent repayments to [$xxx] per [week/month/fortnight] until your normal employment resumes.
[Please provide documentation to support your claim that your household income has reduced due to COVID-19, and provide evidence of any Government income support you may be receiving. Documents could include proof of job termination/ stand-down, proof of Government income support, proof of prior income.]
I propose [outline your proposal i.e. acceptance of their suggested reduced or waived rent payments, or another solution] for a period of [insert period, minimum of six weeks].
[If rent payments can be reduced or waived, please clarify whether the payments will be waived or subject to repayment in the future.]
I look forward to your response.
Kind Regards,
Your Name and Signature
Your Phone Number
Your Email Address
Example situation
Ms Smith’s tenant has had his salary reduced by 25% as a result of business closures following the COVID-19 public health orders. Ms Smith’s tenant has lived in the property for a number of years, and has suggested a rent reduction of 25% per week until his normal employment resumes.
Ms Smith is retired but has a number of properties from which she earns her income. She is therefore in a position where she can accept a temporary reduction in rent payments until her tenant’s usual employment resumes.
Example letter
Ms Smith
111 First St, Woolgoolga NSW
Monday, 6 April 2020
Mr Bird
222 Muffin Lane, Woolgoolga NSW
Response to your request to negotiate rent payments due to COVID-19
Dear Mr Bird
Thank you for contacting me about your weekly rent payments for 222 Muffin Lane.
I understand your financial circumstances have changed due to COVID-19 and would therefore like to discuss your request to reduce your rent repayments by 25% per week until your normal employment resumes.
Please provide documentation to support your claim that your household income has reduced due to COVID-19, and evidence of any Government support you may be receiving. Documents could be proof of lost employment / stand-down / loss of work hours or reasons for not being able to work due to COVID-19 illness, proof of Government income support, and proof of prior income.
Subject to you providing the above documentation, I am able to accept your suggested reduction in rent payments for an initial period of six weeks. Your new weekly rent payment will therefore be $250. You will not be required to repay the 25% reduction once your normal rent payments resume.
Please update me in six weeks on your employment and financial situation, and in the meantime please let me know should you have any queries.
Kind Regards,
Ms Smith
smith@email.com.au
0444 555 666
Advice for landlords approaching their financial institution for mortgage repayment waiver or reduction
When should this letter be used?
· As detailed above, all landlords must be prepared to negotiate rent payments with tenants experiencing financial hardship due to the Coronavirus (COVID-19) pandemic.
· Landlords are encouraged to approach their financial institutions to seek a mortgage freeze or reduced repayments as part of the negotiation discussions with their tenant/s.
What should the letter include?
Your financial situation
You should be open and honest about your financial status with your financial institution. If you rely on the income from your rental property to pay for the mortgage in part or full, and are negotiating with your tenant about rent payment, this should be outlined and evidenced in your request.
Mortgage waiver or reduced payment you are seeking
A tenant who is unable to meet their rental obligations due to COVID-19 but also receives work income and Commonwealth support is expected to continue to make a reasonable contribution to the rent. Depending on the rental amount your tenant has put forward and your other financial circumstances, you should detail the mortgage amount you are able to pay until you or your tenant resumes normal employment arrangements.
Clarify rent waived or propose a post-COVID-19 repayment plan
Clarify whether your rental payment losses (arrears) will be waived or repaid under a repayment plan with your tenant once the COVID-19 emergency is over or the tenant resumes employment.
Template letter
Your Name
Your Address
Date
Financial institution name
Their Address
Request to negotiate mortgage payment waiver or reduction due to COVID-19
Dear [Sir/Madam]
[I am/We are] contacting you about my/our [weekly/fortnightly/monthly] mortgage repayments for [property address].
[My/Our] financial circumstances have changed significantly due to COVID-19 because of [include details of lost employment, reduced work hours, and/or tenant request for rental reduction or waiver, and reasons for income reduction]. My/Our household income per week is now [outline what your income is and include any Government payments received].
Please find attached documentation outlining [my/our] previous and current financial situation.
Because of this, [I/we] would like to discuss the possibility of reducing or waiving our mortgage repayments to [$xxx] for the next [month/fortnight].
[We/I] look forward to discussing this matter further with you.
Kind Regards,
Your Name and Signature
Your Phone Number
Your Email Address
Example situation
Ms Smith’s tenant has had his salary reduced by 25% as a result of business closures following the COVID-19 public health orders. Ms Smith’s tenant has lived in the property for a number of years, and has suggested a rent reduction of 25% per week until his normal employment resumes.
Ms Smith has had her hospitality business income reduced by 50% as a result of the COVID-19 public health orders and relies on the rental income she receives to repay the mortgage on her property. She therefore approaches her financial institution to request a mortgage repayment reduction or waiver.
Example letter
Ms Smith
111 First St, Woolgoolga NSW
Monday, 6 April 2020
Financial Institution A
Financial Institution Street, Sydney, NSW
Request to negotiate mortgage repayment waiver or reduction due to COVID-19
Dear Sir/Madam
I am contacting you about my fortnightly mortgage repayments for 222 Muffin Lane, Woolgoolga NSW.
My financial circumstances have changed significantly due to COVID-19 because my hospitality business income has reduced by 50%. My tenant is now also requesting a rent reduction of 25% a week due to the impact of COVID-19 on their financial circumstances. My household income per week is now $XX.
Please find attached documentation outlining my previous and current financial situation.
Because of this, I would like to discuss the possibility of waiving my mortgage repayments or reducing it to $500 for the next month.
I look forward to discussing this matter further with you.
Kind Regards,
Ms Smith
smith@email.com.au
0444 555 666
