COVID-19 ISSUES ALERT
Governments are currently rushing to ban evictions and protect renters from financial ruin. This is a good thing, and something the community sector has been calling for.
With many Victorians out of work and on the brink, the worst thing right now would be a spike in evictions, and people homeless or house-hunting.
The headline announcements, so far, have been:
- A six-month evictions ban for tenants experiencing financial distress “due to the impact of coronavirus”.
- More generous income support (Centrelink payments) for people out of work.
- Extra funding for some homelessness services, so they can give struggling renters money to help cover housing costs.
It’s a good start. But there are still many unknowns, and a risk of unintended consequences if we don’t get this right.
So, here are six key questions that need to be answered:
1. What kind of evictions aren’t banned?
There might still be extreme circumstances where an eviction is required. Family violence comes to mind. But these circumstances need to be clearly defined. They must be broad enough to be fair, but not so broad that cunning landlords use them to sidestep the eviction ban. For example, can a person still be evicted if the owner needs to move back into their investment property? Or if they are harming (or threatening to harm) members of their family or household, or neighbours, or the home itself? If so, the question then becomes: what happens to those evicted people, given the rental market will essentially be in sleep mode?
2. What happens at the end of the eviction ban?
If a family can’t pay the rent in full, but avoids eviction, there’s a danger they could end up significantly in arrears. Will this debt be forgiven? Or will struggling tenants suddenly be expected to pay up at the end of the eviction ban? Demanding tenants who have been doing it tough to suddenly cough up a big pile of cash during a (likely) recession is unrealistic, and would drive them further into poverty. The last thing we need is to emerge from the health crisis with a debt crisis.
3. What about tenants who are experiencing financial distress, but not as a ‘direct result’ of COVID-19?
Australia is experiencing a significant economic downturn, unseen in a generation. We are currently witnessing the first flush of economic contractions as a direct result of COVID-19, things like immediate job losses. But we may soon get to a point where the number of people in financial distress as a result of the broader economic downturn dwarves the number of people affected as a “direct result” of COVID-19. If the language defining the eviction ban is too narrow, then people in genuine need will miss out on protection.
4. What about rent providers?
Renters, landlords, community housing providers and the banks are being encouraged to strike private agreements (so-called ‘handshake deals’) on mortgage and rent relief measures. This could include measures like temporary reductions, waivers or deferrals. But there is little clarity about if and how housing providers will be assisted to absorb any impact. For example, how will mortgage payments be covered during this time? How can we ensure we don’t push a financial crisis from one part of our housing market to another?
5. What happens if ‘handshake deals’ can’t be struck?
The housing sector is riddled with power imbalances. If you’re a renter, your landlord has more power than you. If you’re a housing provider, you are subject to the whims of your bank and other creditors. So asking renters, banks and providers to reach private agreements could be dangerous. The National Cabinet hasn’t offered guidance on what to do if a suitable agreement can’t be reached. What recourse do renters have?
6. What about those who still can’t get, or can’t get enough, income support?
For people who were already struggling before this pandemic the new income support payments might not be enough to cover the rent. Others groups – such as people on working or student visas and people seeking asylum – are to be denied the new payments all together. What happens to them? The planned payments to homelessness services may not be enough in the circumstances, either. These are services that were overworked and underfunded before the current crisis, and their workload just swelled dramatically. How can we ensure these critical services can meet demand?
We know these policies are being developed at top speed and the situation can change quickly. But that only increases the risk of getting some things wrong.
Our main priority for the next six months must be to keep people in their homes and isolated from others, in order to ‘flatten the curve’ and end the current health crisis.
Which means we need to get this right.
We hope these questions will be addressed over the coming days, and that every Victorian can be safe and secure in their home.