Coming to an agreement on rent changes
The RTA encourages all parties to work together to resolve any issues caused by the impact of COVID-19, including:
- inability of tenants to pay their rent
- the owner or property manager’s right of entry during the declared emergency period
- matters related to maintenance of the property while social distancing is still in place, and
- domestic and family violence matters.
If your tenants have not been significantly affected by COVID-19, both parties should continue to meet their tenancy obligations. For tenants, this includes paying rent.
When are tenants allowed to request a rent reduction?
If a tenant is in financial hardship because of the pandemic – their income has fallen by more than 25% or their rent is more than 30% of their household income – start talking to them early about their options.
Income is defined as the total weekly income after tax, including any government payments.
If they can prove they’re unable to meet their usual rental payments due to the impacts of COVID-19, you are required to work with them to come to a mutual agreement on a temporary rent variation.
Tenants who have not been affected by the impact of COVID-19, must continue to meet their existing obligations.
How do I come to an agreement with my tenant on a rent reduction?
Seek to understand your tenant’s circumstances when considering requests for rent variations. During your negotiations, try to think long term and consider how long the variation will apply for or when it will be reviewed. It’s recommended this be reviewed when a tenant’s circumstances change, such as when their pay increases or reduces further.
It’s important not to encourage tenants to sell personal assets like furniture or their car, or to access their superannuation early to cover unpaid rent, as this could be seen as unlicensed financial advice. Financial advice must only be provided by qualified and licensed financial advisers or counsellors.
We encourage you to negotiate reasonably, communicate openly and try to come to a mutual agreement. Agreeing together is the quickest way to resolve tenancy issues.
We know these are difficult conversations to have, so we have provided a template letter to help you respond to your tenant’s request for a rent variation.
Proof of your tenant’s changed circumstances
As a property owner or manager, it’s reasonable to ask for evidence of changes to your tenant’s circumstances affecting their ability to pay rent. This could include providing the same information that they provided when they first signed their lease or tenancy agreement.
Evidence to support a tenant’s claim could include:
- a copy of your employment separation letter
- a letter from your employer noting reduced hours or saying you’ve been stood down, or other evidence of reduced hours
- confirmation you’ve registered with Centrelink for income support
- evidence that you’ve had to stop working or substantially reduce work hours due to illness with COVID-19, or to care for a household or family member with COVID-19, or have had to self-isolate due to health vulnerabilities
- a doctor’s certificate to support restrictions on entry due to vulnerability or health concerns of household members.
Ultimately, you and your tenants need to determine what level of detail you are both comfortable providing and receiving to demonstrate COVID-19 related hardship. But all evidence should be accurate, as there are penalties for providing false or misleading information about COVID-19 related hardship.
If you come to an agreement on a temporary change in rent due to changed circumstances, you will need to complete a tenancy variation agreement, which is Form 18d (for general tenancies), Form 18f (for moveable dwellings) or Form 18e (for rooming accommodation) to document your agreement and related details. Make sure both parties sign it and keep a copy of it for your records. This document will form part of a tenancy agreement.
What if we can’t agree on a new rent amount?
Make sure you are documenting your attempts to self-resolve with your tenant. If you are unable to reach an agreement, free conciliation is available through the RTA, at which time both parties will be required to provide information to the RTA. The information you provide during conciliation will only be seen by an RTA conciliator and will not be passed on to the other party.
See if you’re eligible for free COVID-19 dispute resolution.
If you are not eligible, you can contact the RTA on 1300 366 311 to discuss your options.
Frequently asked questions (FAQs)