We all need help navigating the maze of information around coronavirus lockdown and the various forms of assistance on offer.
There is so much information for people in different circumstances – tenants, investors and resident owners – that it’s hard to know where to start.
Different states have different programs, then you can throw in the myths and rumours that have grown up.
And when you do think you have finally nailed down the essential information, you find the facts have changed and you have to start again.
So here is a very basic guide to what you are entitled to, what you aren’t, and – most importantly – where to find the very latest information.
Can I get a levies holiday?
The simple answer is no, not really. As this article explains, in most states, three things happen when you stop paying your levies. Firstly, if too many people in your block withhold their levies (or fees) your strata scheme is going to run out of money to pay its bills unless it can find the funds from another source.
For you personally, you will probably be liable for a penalty interest charge (a mandatory 10 per cent in NSW) and you will lose your voting rights until you can pay your bills. If you are on a committee, you may have to take no further part until you are financial again. In some states, anyone whom you nominated for election to the committee will have to stand down.
Faced with a critical drop in income, the strata scheme has two options. It can borrow from its capital works (sinking) fund, if it has one. Or it can take out a strata loan from one of a small number of financial institutions that provide this kind of finance (including our sponsors Lannock).
There is a slight technical problem with this in that the interest on the loan, strictly speaking, should be paid back by the owners corporation, meaning all owners whether they defaulted or not.
The way round that may involve some creative accounting, perhaps involving the creation of a separate account for unpaid levies and the penalty interest on them should more than cover the interest on the money borrowed.
Can I avoid penalty interest on my levies?
This varies from state to state – in some like NSW, penalty interest is the default but can be waived by a majority decision of owners.
In other states, penalty interest may be charged, but that requires a majority decision to do so.
However, if your owners corporation is having to borrow money to make up for the shortfall in levies income, it makes sense for them not to waive penalty interest charges, regardless of how reasonable that might seem.
Charging the penalty interest would mean that owners who hadn’t defaulted wouldn’t need to pay interest on a loan that hadn’t been required becasue of them.
Every strata scheme has to decide this for themselves but we’d think where there were only one or two households affected, the other owners might decide to share the pain.
But if there were multiple levies defaulters, and the strata scheme was having to borrow money to make up for the shortfall, the owners might decide to leave them in place or impose the charges allowed by state law.
Can I just stop paying rent?
In short, no. You could go into arrears, which would normally trigger an eviction notice, but the government halt to evictions is only for people who can prove their household income is down by 25 percent, after tax, due to coronavirus.
What you should be doing is talking to your landlord about reaching an agreement to pay less rent for which they can be compensated through other means (see Land Tax, below). In short, the non-eviction rule doesn’t apply to everyone in every circumstances and unless you reach an agreement, you will have to make up the rent some other way, eventually.
The good news is that former Airbnb properties are coming back on to the market so availably is going up and rents are going down. But you can’t just walk out, either. Residential tenancy laws still apply in most circumstances.
One of the odd quirks to come out of this is that until recently, landlords have not been able to apply for relief on the landlord insurance unless they issued an eviction notice. Since they couldn’t do that, they couldn’t make a claim – but most of the big insurers are now waiving that requirement.
Both tenants and landlords really need to read the Tenants Union fact sheets on tenants.org.au (for your state) or HERE for NSW.
In Victoria, the government is tackling the issue directly by offering up to $2000 directly to tenants who are having trouble paying their rents. https://www.housing.vic.gov.au/help-renting/rentrelief
What’s the deal with Land Tax relief?
This is one area where landlords can pass a benefit on to their tenants. It varies from state to state but in NSW, you can apply for the lesser of these two:
- the amount you reduce your rent charged to a tenant or
- 25 per cent of the land tax attributable to the property that you let.
If you’ve already paid your land tax, you can apply for a refund. And if you haven’t paid your land tax yet, and you get a reduction, you can also get a deferral of three months on the payment.
For other states and territories Google “land tax coronavirus” and the jurisdiction and a link to a page of information should magically appear.
What does the mortgage “pause” mean?
All the big four banks and some of the smaller ones are allowing their clients to stop paying their mortgages for up to either three or six months, depending on the bank.
But this too will come at a cost, eventually. Your bank will add the interest accrued during the “pause” to the capital amount of your loan and you will either have to pay more when it starts again or your payment period will be extended.
Each of the banks has a slightly different approach to what they need from you to allow you to pause your mortgage. This excellent article on the ABC News website spells out what each of the banks is doing and what that means to their customers.
In NSW, if you’re having difficulty paying your household energy bill you could be eligible for Energy Accounts Payment Assistance (EAPA) $50 vouchers. EAPA vouchers are sent electronically to your energy retailer and used to credit your home electricity or gas account.
To qualify you must have an electricity or natural gas account for a NSW residential supply address, which is your primary place of residence; be the electricity or natural gas account holder (your account and bill must be in your name) and be experiencing a short-term financial crisis or emergency that has impacted your ability to pay your residential energy bill(s). You can access more information HERE.
Other states and territories may have their own assistance programs.
Advice, information and support
While the Federal Government has been co-ordinating the national response to coronavirus, each of the states and territories has evolved their own programs of restrictions, advice and support.
For general information about what to do and how to get help in your state, click on the appropriate link below where you will find web pages that will provide information, advice and links to sources of financial support: