posted in: Coronavirus
Managing Rent Payments During the Coronavirus Pandemic
For those Australians concerned about losing their jobs or having a reduced income throughout the coronavirus pandemic, they may be worrying about how they will pay their rent.
If this is something you’re worried about, putting an action plan in place to address all possible scenarios before they arise will help prepare you should the worst case scenario occur.
Speak to your landlord
If you are worried you won’t be able to afford your rent, you should talk to your landlord or the property manager.
If you are looking to break the lease to seek out somewhere less expensive, some rental leases will include hardship provisions which cover shifting financial circumstances. Your landlord may also negotiate something with you directly.
If you want to remain in the home, you can request a delayed payment, payment plan or a rent reduction. While the landlord doesn’t have to accept this, they may be willing to negotiate given the unique circumstances. There is a good chance that you’re not the only one struggling to pay your rent during this time, so in the interests of holding onto a good tenant rather than trying to find a new one in the current environment, your landlord may be willing to negotiate.
Can the landlord evict me?
The good news is that the government is taking steps to protect people from being evicted for a period of at least six months. The changes are yet to be announced but will be designed to provide a safeguard for tenants affected financially by coronavirus.
Until this is announced, the rules are as follows. If you’re behind on your rent, your landlord can take steps to evict you. While it varies in each state, typically the landlord will need to issue a termination notice. That still gives you time to repay the rent owed. Rather than face eviction and potentially be blacklisted on tenant databases, it may make sense to negotiate to leave earlier if possible.
Tenancy laws vary in each state so it’s important to do your research on what your rights and responsibilities are in your state.
Free up your cash flow
Creating an emergency savings fund for rent and other essential expenses is a great way to protect you should your income be disrupted. To be able to put this money away, you will need to reduce your spending and free up your cash flow.
Here are some options you may want to consider:
- Negotiate with your providers to pay annual bills in more frequent installments. That way you won’t be hit with a big bill at once, preserving your cash flow in the short-term
- Drop non-essential regular expenses such as your gym membership or other subscriptions
- Move personal insurances such as income protection, life insurance and TPD insurance into your superannuation. The costs will be paid from your superannuation balance, freeing up cash flow. Talk to your financial advisor to see if this is the right option for you and to discuss the impacts
- Cease any voluntary super contributions. You can resume these at a later date when you no longer require the cash flow
- Reduce the number of days your children attend daycare or take them out completely to reduce your costs
- If you are self-employed you may be able to set up a payment plan to pay tax in installments
- You may be able to vary your PAYG installments if you think the current rate will result in you paying too much tax for the year. By varying this, you free up the cash now rather than having to wait for your tax refund
Create a household budget to monitor and reduce your spending in order to free up enough money to meet your rental commitments.
What about the Federal Government’s stimulus packages?
The Federal Government has now committed over $190 billion in stimulus packages to help Australians deal with the financial fallout of coronavirus. While the stimulus packages largely support small businesses to stay afloat, there are also measures to help individuals.
If you access the age pension, Family Tax Benefit, Youth Allowance, Jobseeker Payment (previously known as Newstart), Austudy, Disability Support, or parenting and carer payments, you will receive a $750 one-off cash payment. This will be paid into your account from 31 March. It has recently been announced that some welfare recipients will also receive another one-off $750 payment on 13 July.
The Jobseeker Payment (previously known as Newtstart) has also been temporarily doubled, providing people with an additional $550 a fortnight. While the payment will be subject to income tests, the Government will waive asset tests and waiting periods to access the payment.
People under financial stress will be able to access up to $10,000 from their superannuation this and next financial year. The money won’t be taxed and won’t be treated as income when assessing Centrelink or veteran’s payments.
The states are also introducing their own stimulus packages, so do your research to see if you are eligible for any benefits.
As the lockdown continues to deepen, you can expect that further stimulus packages will be announced, similar to other countries around the world.
Remember you’re not alone
It’s important to remember you’re not alone. Coronavirus is going to have a large impact on many industries, individuals and families. While individuals will be impacted at varying levels, there is no doubt everyone will be impacted in some way by the current pandemic.
From what we have witnessed in other parts of the world, governments and communities have been stepping in to support those most affected with numerous initiatives such as enabling homeowners to put their mortgage payments and other expenses on hold.
It is important in these times to remember you are not alone, and more than ever this is the time to support each other. However, if you are being significantly impacted we suggest you speak to friends, family and colleagues or potentially seek professional help to assist you during this period.
Taking steps now to ensure you can afford to pay your rent makes good financial sense. While the worst case scenario may never eventuate, being prepared will give you peace of mind and ensure you’re mitigating the risk.
N.B: At the time of writing, this advice was given on current circumstances. This may change as government advice changes
About David Hancock
David Hancock is a director and Senior Financial Planner at Montara Wealth. His role is to oversee the running of the business and ensure the delivery of exceptional service and strategic based advice to clients. David is well known for developing strong long-term relationships with clients and is passionate about helping them identify and implement life changing financial strategies. www.montarawealth.com.au