21st September 2020: Victorian Landlords Fear Homelessness Amid Bans on Inspections and Evictions

Victorian landlords fear homelessness, financial trouble amid bans on inspections and evictions

Brought to you by Domain - Jim Malo

Victorian landlords struggling to fill vacant rental properties say they face difficult financial positions or homelessness if they cannot collect rent on their investments.

The warning comes after a state government ban on evictions for non-payment of rent was extended until March next year. In-person inspections of properties by prospective tenants are also banned during lockdown, a rule the peak real estate body is lobbying to overturn.

Hoppers Crossing landlords Olya Mancuso and Igor Propenko had been unable to fill their newly built rental through the stage four lockdown, leaving them to survive on Mr Propenko's JobKeeper allowance alone while paying two mortgages.

"We could not rent it out because all the agents were shut and we couldn't even do it on Zoom," Ms Mancuso said. "It was vacant for a long time and we had to pay the bank.

"We nearly lost the property because we didn't have money to pay."

They gained possession of the property as stage four began, but most potential tenants were unwilling to do virtual inspections. They only found a tenant this week.

Igor Propenko and Olya Mancuso with two of their kids, Daniel and Jane. Photo: Penny Stephens

Their bank allowed a 50 per cent discount on their mortgage payments, which still left them in a difficult financial situation during the lockdown.

"He paints houses and he gets houses to paint from real estate. He paints empty houses," Ms Manscuso said. "It's only him and four walls but even such a job was restricted to him.

"Even if the investment was vacant, he still could pay for the investment and mortgage [if he was working]."

Although they now have a tenant, they fear the reduction of JobKeeper and the possibility of their renter not paying rent.

"It is very callous and unjust," Ms Manscuso said. "Maybe if it was two of us it would be OK, but it is our three children as well. For some people, [JobKeeper] is a pitiful pittance that only covers mortgages and food.

"I'm scared. We might end up homeless. I'm very worried because [reduced JobKeeper] won't be enough to cover expenses."

Mr Propenko and Ms Mancuso fear they may lose both their homes. Photo: Penny Stephens

Landlords also face the prospect of falling rent prices. Melbourne apartment rents fell for the first time in 15 years in the June quarter, falling 3.5 per cent in three months to a median $415 a week, on Domain data. House rents lost 2.3 per cent to a median $430.

The inner city was hardest hit, with inner Melbourne apartment rents dropping 7.2 per cent in three months to a median $450.

While government support for landlords is available in the form of cash grants toward rent payments, land tax discounts, and federal tax concessions such as negative gearing, Real Estate Institute of Victoria president Leah Calnan said this was not enough in the pandemic.

"If they've got no rental income coming in, they still have to find the money every month for the mortgage," she said. "[They can claim it on tax] but in the meantime the financial impact and the mental anguish might come sooner."

She said the inspection ban should be overturned.

"It's frustrating," she said. "They've got vacant properties, they can't lease them."

Ms Calnan said the six-month extension of the eviction ban was hurting landlords, who were struggling to recoup their losses through the Victorian Civil and Administrative Tribunal.

A DHHS spokesperson previously said restrictions on inspections are guided by advice from the Chief Health Officer, and added there is a risk when people move around the state and interact in indoor settings.

Victorian Premier Daniel Andrews has not ruled out considering exemptions to the inspection ban, particularly for people needing to sell their home. On the eviction ban, Treasurer Tim Pallas has said: "Nobody should be worried about losing a roof over their head right now."

Other states have extended their eviction bans despite escaping the brunt of the COVID-19 pandemic, including Western Australia, Tasmania and the ACT.

AMP Capital chief economist Shane Oliver said it was possible for landlords to become homeless if they default on their mortgages.

"Some landlords are running at a lot of risk here," he said. "Especially if their family home is connected to the debt of the investment property."

But it was better to prevent those who own no assets from financial ruin, Dr Oliver said.

"Ultimately it's best to protect [renters] from homelessness," he said. "On one hand the investor is trying to run a business so you have to respond to that.

"But we also have to allow for the impact on the economy. The social cost of [not putting in place an eviction ban] is so horrendous it's simply not possible."

The ban on evictions, rent rises and a lack of migration to Victoria would affect property prices, but Dr Oliver said he felt the trade-off had been worth it to avert a larger catastrophe.

"It's preventing a big rise in social tension," he said. "It is incumbent for those in a slightly better position to help if they can."