By enacting the COVID-19 Emergency Response Act 2020 (Qld) (Emergency Response Act) on 23 April 2020, the Queensland Government took a fundamental step towards implementing the Federal Government’s Mandatory Code of Conduct (Code) in Queensland. However, as was discussed in our recent Alert on 23 April 2020 (here), the Emergency Response Act represented only the first step in the process by which Queensland will give effect to the Code.
In this article, Partner, Don Battams and Senior Associate, Chris Cullen discuss the Residential Tenancies and Rooming Accommodation (COVID-19 Emergency Response) Regulation 2020 (Qld) and its impact on residential tenancies in Queensland.
The Residential Tenancies and Rooming Accommodation (COVID-19 Emergency Response) Regulation 2020
Since we last wrote, Queensland Parliament made on 24 April 2020 the Residential Tenancies and Rooming Accommodation (COVID-19 Emergency Response) Regulation 2020 (Qld) (Regulation), authorised under section 24 of the Emergency Response Act. The Regulation is accessible online here.
The Regulation seeks to support the Queensland residential rental sector and protect the health, safety and wellbeing of persons affected by the COVID-19 emergency. To achieve this, the Regulation modifies the operation of the Residential Tenancies and Rooming Accommodation Act 2008 (Qld) (RTRA Act) to provide, in certain circumstances, temporary mechanisms for rent relief and the variation or termination of tenancy agreements.
The Regulation has effect from the date of notification on 24 April 2020 (though some provisions have retrospective effect from 29 March 2020) and will expire on 31 December 2020 – being the expiry date of regulations made under section 24 of the Emergency Response Act.
What is the effect of the Regulation on residential tenants?
The various forms of rental relief provided in the Code have, in essence, been replicated in the Regulation. We summarise below the key measures for relief to tenants and changes to residential tenancy arrangements:
- Moratorium on evictions: A landlord or its agent will be prevented from evicting a tenant for failing to pay rent where the tenant’s failure relates to the tenant suffering ‘excessive hardship because of the COVID-19 emergency’ (this is discussed in detail below). This will prevent a landlord giving the tenant a notice to leave, applying to terminate the tenancy or otherwise causing the tenant to vacate the premises through coercion, intimidation, changing of the locks to the property or because of false or misleading information.
- Extending the term of tenancies: For fixed term tenancies ending on or before 29 September 2020, landlords are required to offer tenants suffering excessive hardship because of the COVID-19 emergency an extension of the rental term to 30 September 2020 (or an earlier date as requested by the tenant). Where an extension is agreed, no costs will be payable by the tenant in relation to the extension (i.e. to negotiate and document the extension) and the tenancy must proceed on the same terms as prior to the extension (unless otherwise agreed).
- Restricting landlord’s entry onto premises: Except where the tenant consents, landlords are prohibited from entering premises for inspections, routine repairs or maintenance, to facilitate a valuation or to show the premises to prospective buyers where:
- the tenant or another at the premises is a vulnerable person or subject to a quarantine direction;
- where the landlord is subject to a quarantine direction; or
- where the landlord’s entry would contravene a public health direction.
In lieu of the above, the Regulation permits landlords or their agents to conduct virtual inspections by way of video conference or exchange of photographs or video.
- Termination for excessive hardship: Under the RTRA Act, tenants can apply for a termination order in respect of a tenancy agreement where they would suffer hardship if the agreement is not terminated. This position is modified by the Regulation to require that tenants first make a dispute resolution request to the Residential Tenancy Authority (RTA) seeking to reach a conciliation agreement with the landlord. Failing this, the RTA can only then make a termination order if it is satisfied the tenant is or has been suffering excessive hardship because of the COVID-19 emergency.
- Rent decreases under a variation agreement: Parties may at any time enter into a variation agreement for a rent reduction for a stated period or a payment plan for any unpaid rent. However, entering into a variation agreement may impact on whether sections 91 to 93 of the RTRA Act (which govern rent increases) apply to an increase in rent which occurs at the end of the variation agreement term.
- Termination for domestic violence: Tenants are afforded the right to end their interest in a tenancy agreement where they can no longer safely continue to occupy the premises due to domestic violence. The tenancy will end upon the tenant giving appropriate notice to the landlord with evidence supporting the existence of domestic violence. This evidence can include a temporary or non-temporary protection order or a report from a doctor, social worker or solicitor about the domestic violence.
The Regulation contains provisions equivalent to those summarised above in respect of residential tenancy agreements for rooming accommodation agreements. However, for the purposes of this Alert, we have focussed on the provisions of the Regulation as they relate to residential tenancy agreements.
How does the Regulation affect landlords?
The Regulation modifies the application of the RTRA Act to alter the rights and obligations of landlords under residential tenancy agreements. We briefly summarise the key changes below:
- Prohibition on issuing a notice to remedy breach for unpaid rent: Landlords are prevented from issuing tenants with a notice to remedy breach in respect of unpaid rent where the landlord knows or ought reasonably to know the tenant is or has been suffering excessive hardship because of the COVID-19 emergency (discussed below). However, landlords remain entitled to issue a show cause notice to the tenant for unpaid rent, after which the tenant will have 14 days to either pay the unpaid rent or inform the landlord that rent is unpaid due to their suffering excessive hardship because of the COVID-19 emergency. In the latter scenario, the landlord is able to request that the tenant enter a variation agreement with the landlord.
- Prohibition on issuing a notice to leave without grounds: Landlords must not issue a notice to leave without grounds (as permitted under section 291, RTRA Act) where the tenant is or has been suffering excessive hardship because of COVID-19. However, where such a notice is given in contravention of the Regulation, the notice will be taken to have effect at the end of the COVID-19 emergency period.
- Release from routine repairs and maintenance obligations: Where it is inconsistent with a public health direction, a landlord is released to the extent of inconsistency from their obligations to maintain the premises in good repair, keep common areas clean and otherwise compliant with minimum housing standards – except to make emergency repairs.
- Extended period to remedy breach: Where a tenant issues notice to a landlord to remedy a breach which relates to an obligation from which the landlord is released, the period in which the landlord must remedy the breach is extended until the first of the following events occur:
- the day the obligation ceases to be inconsistent with a public health direction (e.g. social distancing); or
- the day the COVID-19 emergency period ends.
- Notice to leave for sale or owner occupation: Landlords are entitled to give to tenants a notice to leave the premises where the landlord is preparing to sell the premises, a contract for sale has been entered into, or where the landlord or their immediate family intends to occupy the property. Where a notice to leave is received, the tenant will be required to handover the property:
- for a notice to leave for sale – on a date not earlier than two months after the notice is given (which may be earlier than the day a fixed term agreement ends); or
- for a notice to leave for owner occupation – on a date not earlier than two months after the notice is given.
Where the tenant fails to hand over vacant possession on the handover date, the landlord can apply to QCAT within two weeks of the handover date for a termination order.
Landlords will be liable for penalty up to 50 penalty units ($6,672.50 at the time of writing) where a notice to leave is issued on the basis of information which is false or misleading, or where the landlord subsequently relets the premises.
- Prohibition on recovering reletting costs from tenant: Notwithstanding the terms of a tenancy agreement, landlords are not entitled to recover reasonable reletting costs from a tenant who terminates a fixed term tenancy by termination order, notice ending tenancy or a notice of intention to leave.
What is ‘excessive hardship because of the COVID-19 emergency’?
A person suffers excessive hardship because of the COVID-19 emergency if, during the COVID-19 emergency period (i.e. the period that the COVID-19 public health emergency declared under the Public Health Act 2005 (Qld) on 29 January 2020 remains in effect):
- the tenant or another under their care suffers from COVID-19;
- the tenant is subject to a quarantine direction;
- the tenant’s place of employment is closed or their employer’s trade or business is restricted due to a public health direction;
- the tenant is self-isolating because they are a vulnerable person, lives with or is the carer for a vulnerable person;
- the tenant is restricted from working or returning home due to travel restrictions; or
- the COVID-19 emergency prevents the tenant leaving or returning to Australia,
and consequently, the tenant suffers a loss of income of 25% or otherwise the tenant’s rental expense represents 30% or more of their income. Where there is more than one person under a tenancy or accommodation agreement, the percentage loss of income and the proportion of rent relative to income will be the combined total of all tenants.
To evidence the above matters, landlords may request that tenants disclose certain information or documents which support the claim that the tenant or resident is or has been affected by the COVID-19 emergency (and to the necessary extent). The RTA may also require such information be provided for the purpose of a dispute resolution process, if that is undertaken by the parties.
To ensure the process for relief is fair and transparent, tenants are required under the Regulation to:
- notify landlords as soon as reasonably practicable after a change in circumstances occurs which has the effect that the tenant or resident no longer suffers excessive hardship; and
- ensure documents or information given to the RTA or another person do not contain false or misleading material for the purpose of claiming the person is or has been suffering excessive hardship. Contravention of this provision can lead to the imposition of a penalty of up to 50 penalty units ($6,672.50 at the time of writing).
What happens if disputes arise between tenant and landlord?
The Regulation seeks to emphasise that parties to a tenancy agreement (or rooming accommodation agreement) undertake a dispute resolution process such as conciliation in relation to disputes arising under the Regulation and the RTRA Act. The Regulation directs parties to undertake dispute resolution in several circumstances, for example:
- where a landlord requests that the tenant enter a variation agreement, and the parties are unable to agree on the variation;
- as a prerequisite to a tenant applying for a termination order for excessive hardship; or
- where the tenant has failed to comply with a show cause notice in relation to unpaid rent within 14 days due to the tenant suffering excessive hardship because of the COVID-19 emergency.
As the Regulation is now made and notified by the Queensland Government, residential tenancy arrangements in Queensland are subject to and modified by the provisions of the Regulation insofar as those tenancies are governed by the RTRA Act.
We expect that the Queensland Government will soon table regulation(s) modifying leasing arrangements under the Retail Shop Leases Act 1994 (Qld) to give effect to the rent relief measures in the Code for commercial and retail tenancies. We will monitor developments in this regard and report on any regulation(s) as and when announced.
If you would like further advice on the matters discussed in this article, please contact our Commercial Property and Leasing team.