Legal Insights

COVID-19 and rent: What happens when you can't pay?

By Lindsay Sheather & Susanne Rakoczy

• 23 April 2020 • 3 min read

The COVID-19 Legislation Amendment (Emergency Measures) Act 2020 (NSW), which came into effect on 25 March 2020, amended a number of acts including the Residential Tenancies Act 2010 (NSW). This has allowed the Minister to make regulations temporarily restricting a landlord’s enforcement actions under a lease as a result of the impact of COVID-19 on a tenant’s ability to perform its obligations.

As a result, the Residential Tenancies Amendment (COVID-19) Regulation 2020 (NSW) (Regulations) under the Residential Tenancies Act 2010 (NSW) came into effect on 15 April 2020.

What has changed?

With effect from 15 April 2020, landlords are prohibited from:

  • issuing a termination notice on an impacted tenant (being a member of a household impacted by the COVID-19 pandemic) or applying to the Tribunal for a termination order in respect of a beach of a residential tenancy agreement arising from an impacted tenant’s failure to pay rent, water usage charges or other utility charges
  • listing the personal details of an impacted tenant (being a member of a household impacted by the COVID-19 pandemic) on a residential tenancy database due to the non-payment of rent, water usage charges or other utility charges payable under a residential tenancy agreement.

In addition, any termination notice given by a landlord to a tenant during the period 15 April 2020 to 14 October 2020 which operates to terminate a residential tenancy agreement:

  • at the end of a fixed term tenancy or periodic agreement
  • as a result of tenant breach (other than due to non-payment of rent, water usage charges or other utility charges)

which is in respect of a long-term tenancy where the tenant has been in occupation for 20 years or more, must give at least 90 days’ notice of the termination.

What is a household impacted by the COVID-19 pandemic?

A household impacted by the COVID-19 pandemic is one where one or more of the rent payers has:

  • lost employment or income as a result of the impact of the COVID-19 pandemic
  • had a reduction in work hours or income of at least 25% due to COVID-19
  • had to stop working or materially reduce their work hours because the rent payer, a member of the household or someone whom the rent payer cares for fall ill with COVID-19,

and, as a result, the weekly household income (comprising the total weekly income of all rent payers in the household, including any government payments) for the household has been reduced by 25% compared to the weekly household income for the household before the occurrence of any of the above matters.

Does that mean landlords cannot evict a tenant?

No – the prohibitions under the Regulations only apply to an impacted tenant.

However, a landlord may give a termination notice to an impacted tenant or apply for a termination order to be issued on an impacted tenant where it would otherwise be prohibited from doing so under the Regulations if:

  • the notice is given or the application to the Tribunal for a termination order is made at least 60 days after 15 April 2020
  • the landlord and impacted tenant have participated, in good faith, in formal rent negotiations
  • it is fair and reasonable in the circumstances of the case for the landlord to give the termination notice or apply for the order.

The landlord retains its rights under a residential tenancy agreement in respect of non-impacted tenants.

Things to note:

  • the above changes will be in effect for a temporary period of 6 months commencing 15 April 2020, unless extended
  • the above changes do not affect social housing
  • similar changes apply to Boarding Houses under the Boarding Houses Regulation 2013 (NSW).

Maddocks has produced guides to a range of legal issues raised by COVID-19. You can access these guides here.

Looking for guidance on these changes?

Get in touch with the Property & Development team.

By Lindsay Sheather & Susanne Rakoczy

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