COVID pushes renter-landlord relations to the brink

author-avatar By on November 12, 2020
COVID pushes renter-landlord relations to the brink

Photo by Thought Catalog on Unsplash

A new study has revealed the strain the pandemic has put on the relationships between landlords and tenants.

The Australian Housing and Urban Research Institute (AHURI) found a quarter of tenants were experiencing immediate problems paying rent, and 35% were concerned they would not be able to pay full rent in the next few months.

Despite this, many tenants were apprehensive about requesting rental assistance from their landlords out of concern of future repercussions, like poor references, or property defects not being fixed. 

Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner occupiers.

Lender
Advertised rate Comparison rate Monthly repayment Rate TypeOffsetRedrawOngoing FeeUpfront FeesLVRLump Sum RepaymentAdditional RepaymentsPre-approval

VariableMore details
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
VariableMore details
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
VariableMore details
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • Refinance only. Fast online application
  • No Nano fees. Free 100% offset sub account
  • Mobile app, Visa debit card & instant payments
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • Refinance only. Fast online application
  • No Nano fees. Free 100% offset sub account
  • Mobile app, Visa debit card & instant payments
VariableMore details
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
VariableMore details
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^

Rates correct as of October 27, 2021. View disclaimer.

The study found 93% of tenants reported they initiated rental negotiations, with most landlords assuming "no news was good news". 

Only half of the tenants who had asked for rent reductions reported the landlord or property owner agent had fully accepted their requests

The financial hardship tenants were experiencing extended to not being able to pay utility bills on time, going without meals and being unable to heat their homes.

While some landlords also experienced challenges from a loss of rental income, most were able to manage the financial shortfall.

Some landlords were conflicted between trying to show compassion, while also not wanting to fall into financial hardship themselves.

Others questioned whether tenants asking for assistance were in genuine need. 

AHURI lead report author Dr David Oswald said as more time was spent at home, issues like property defects and maintenance, and tenant relationships, were being put under more strain. 

"The pandemic has amplified many weaknesses - such as affordability, rental security, overcrowding and homelessness - in the Australian housing system; and in particular, exacerbated many existing challenges in the rental sector," Dr Oswald said.

"With moratoriums on evictions, rent increases and mortgage deferrals all coming to an end, the issues uncovered by this research risk rapidly worsening." 

See also: Renters vs homeowners COVID-19 struggles compared

Government support critical to rental landscape 

The research highlighted the critical role government financial support, primarily through JobSeeker and JobKeeper, was playing in enabling many tenants to pay bills, cover the cost of rent, and remain in their home.

Prime Minister Scott Morrison this week said JobSeeker would be further extended until the end of March, but at a reduced rate, with JobKeeper set to finish around the same time.

"It was clear from our findings that without this government support, many tenants would be in a significantly worse position, including potentially homeless," Dr Oswald said.

"Both landlords and tenants reported confusion, stress and uncertainty about what would happen when government financial support packages end." 

Overall, there was broad agreement government support was well received, although there was acknowledgment it was geared towards the tenants and not landlords.

"Overwhelmingly, landlords thought government action had not adequately considered them," Dr Oswald said.

"Formally including mortgage relief strategies as part of the broader housing and wage relief assistance would provide a more holistic package of support.

"By focusing on improving the success of negotiations in the landlord-tenant relationship, both economic and mental wellbeing could be significantly improved." 

What's the solution? 

AHURI recommended future policy on supporting the landlord–tenant relationship should consider:

  • A protective negotiation framework to structure rent negotiations between tenants and landlords;
  • Clear government advice for real estate agents;
  • Centralised guidance on tenant hardship, that defines the evidence required for tenants to demonstrate financial hardship;
  • A landlord hardship fund;
  • Policy flexibility on moving; and 
  • Improved information and guidance in defining the end of support.


Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Great Southern Bank, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

Latest Articles

author-avatar
Alex joined Savings.com.au as a finance journalist in 2019. He enjoys covering in-depth economical releases and breaking down how they might affect the everyday punter. He is passionate about providing Australians with the information and tools needed to make them financially stable for their futures.

Collections:

Be Savings smart.
Subscribe for free money newsletters.

By subscribing you agree to the Savings Privacy Policy