Rental rescue for business, tenants to be protected from eviction

Landlords will be blocked from evicting tenants in a rental rescue package aimed at protecting people who struggle to pay their rent during the coronavirus crisis.

State governments are working on extraordinary interventions to protect up to eight million Australians in rented homes, as the property sector warns of a "disastrous" outcome if rental payments come to a halt.

Landlords will be blocked from evicting tenants under a plan being worked on by the state and federal governments.Credit: Peter Rae

A separate plan is underway to help small business owners stay afloat when they cannot pay the rent because their stores and services have been closed down by government edict to slow the spread of COVID-19.

The measures do not include a federal bailout to pay the rent for residential or small business tenants, given the states and territories are responsible for tenancy laws and are taking the lead on stronger protections for renters.

At least $9 billion in commercial rent is at stake this year in the office market, according to estimates from Deloitte, while the consulting firm estimates residential rents to be worth $16.5 billion a year in Sydney alone.

Prime Minister Scott Morrison discussed the plans with state and territory leaders in the national cabinet meeting on Wednesday night, clearing the way for new measures to be announced within days.

The measures would prevent landlords evicting tenants from both residential and commercial leases if those tenants can point to the coronavirus crisis as the cause of their financial stress.

Demand for help is growing after more than 280,000 people told Centrelink on Wednesday they intended to claim payments under the emergency coronavirus assistance measures.

Victorian Premier Daniel Andrews said he did not want to see tenants evicted but he understood the challenges for landlords who had to repay mortgages.

"The notion that you are going to be able to just pick up another tenant off the street, I think that is pretty unlikely," he said.

"So if everyone works together and we can get some support that is hardship-based then I think we can find a way forward."

Mr Andrews said Mr Morrison would "take you through that" this Friday when the package was announced.

Treasurer Josh Frydenberg spoke with state and territory counterparts on Wednesday in a phone hook-up to outline the latest financial forecasts and address the pressure on small business owners being shut down.

Mr Frydenberg is asking banks to do their share of the task by being flexible with customers who cannot pay loans or mortgages, in keeping with his argument this week that there is an "alignment of interest" for them to keep their customers after the crisis passes.

Commercial landlords will be helped in return for accepting the halt to evictions for vulnerable customers, but the nature of that help is still being negotiated.

Real Estate Institute of Australia president Adrian Kelly said governments would need to support up to three million residential properties housing eight million Australians, and in turn the agents and landlords who depend on the rent.

"What the government must do is provide rental support for those tenants, so that the cash can continue to flow," he said.

"If the cash doesn’t flow, then the estate agents cannot keep their doors open, the property owners lose out as well, and the estate agents and employees and the workers who do maintenance work lose as well," he said.

"We don’t have weeks – this is happening right now, and many of our members right around the country are already receiving telephone calls from tenants saying they’ve lost their jobs.

"You’ve only got to look at the queues outside Centrelink offices right now to see it."

Deloitte Australia’s lead partner for real estate, Alex Collinson, said landlords would see tenants in sectors like groceries do well while others were forced to shut down.

"Can the retail landlords survive for a period of time without assistance? Absolutely, because they are in a strong position. Whether they would need assistance is a very hard question to answer – it depends on how long the shutdown period goes on."