Legislation update

In addition to the Commercial Tenancies (COVID-19 Response) Bill 2020 (WA) and the Commercial Tenancies (COVID-19 Response (Early Termination)) Bill 2020 (WA), the Western Australian Parliament has passed the Residential Tenancies (COVID-19 Response) Bill 2020 (WA) (the RTCRB). 

The RTCRB seeks to introduce new measures to protect tenants and landlords of residential tenancies from the financial distress caused by the economic effects of the COVID-19 pandemic and to prevent tenants being evicted during the emergency period which, commenced on 30 March 2020 and, at this stage, ends on 29 September 2020.

At the time of writing, the RTCRB has been passed and is awaiting Royal Assent. 

New measures

The new measures, which will apply to tenants in public and private housing, park homes, as well as to boarders and lodgers, will:

• introduce a moratorium on eviction for the emergency period;
• prohibit rent increases during the emergency period;
• provide that any fixed term tenancy agreement due to expire during the emergency period will continue as a periodic agreement on the same terms;
• ensure that if premises are repossessed during the emergency period, the mortgagee or person with superior title will be bound by the tenancy agreement;
• include a new dispute resolution process;
• prohibit recovery of interest in respect of unpaid rent during the emergency period;
• relieve lessors of the obligation to conduct ordinary repairs if the reason they cannot do so is COVID-19 related financial hardship or a lawful restriction on movement; and
• enable a tenant to end a fixed term tenancy prior to its end date without incurring break lease fees or other costs (the tenant will still be liable for damage and rent arrears).

Moratorium on evictions

The COVID-19 pandemic has seen many Western Australian’s lose their jobs or have their working hours reduced. Consequently, many residential tenants may experience difficulties in meeting their rental payments. The six-month moratorium on evictions will prevent landlords from exercising their power under a lease to evict a tenant for the non-payment of rent.

Exceptions to the moratorium on evictions

Despite the moratorium on evictions, there are circumstances in which tenancy agreements can be terminated. These circumstances include the following:

• a tenant is causing serious damage to the property or injury to the landlord or a person in an adjacent premises;
• every tenant dies;
• the tenant delivers up vacant possession of the premises pursuant to an agreement in writing with the lessor to terminate the lease;
• the landlord or tenant is experiencing undue hardship;
• a tenant is experiencing family violence and the perpetrator needs to be evicted;
• the tenant abandons the premises; or
• the agreement is frustrated (refer to our previous alert on Landlords and COVID-19: navigating a path in the commercial and retail leasing space for more information).

Obligation to pay rent remains

A landlord cannot increase rent during the emergency period and cannot claim interest in respect of rent not paid, but the RTCRB does not absolve a tenant from paying rent. That obligation remains. 

A tenant who is experiencing financial difficulty is encouraged to approach their landlord to seek to negotiate a mutually acceptable arrangement.

Such arrangements could include a reduction to the amount of rent paid for a period of time or a temporary freeze on rent. 

If an agreement cannot be reached, either party may seek to terminate the tenancy after complying with the termination processes outlined in the RTCRB.

The new legislation introduces a mandatory conciliation process before an application for relief can be made, with the potential for binding resolution of disputes to occur before they get to the Magistrates Court or the State Administrative Tribunal, thus relieving potential pressure on the court system.

Proof of financial hardship

A landlord is permitted to seek proof from a tenant that they have lost their job due to the COVID-19 pandemic. At the time of writing, it is suggested that a landlord cannot ask a tenant to provide bank statements or other evidence pertaining to their savings. 

Further, landlords must take care not to provide financial advice to tenants. Advising tenants on the possibility of accessing their superannuation to fulfil their rental payments, for example, is likely to amount to a breach of the Corporations Act 2001 (Cth) and therefore must be avoided. For more information, read our update on ASIC’s warning on giving unlicensed financial advice.

A tenant in arrears unrelated to the COVID-19 pandemic

The moratorium on evictions introduced by the RTCRB only applies to financial hardship caused by the economic effects of the COVID-19 pandemic. Accordingly, any breach or termination process already underway relating to the non-payment of rent or property damage occurring prior to the COVID-19 pandemic, will not be prevented by the RTCRB. 

Further, the Legislative Council has, at the time of writing, proposed amendments to the RTCRB. It is proposed that if a tenant’s failure to pay rent during the emergency period is not due to financial hardship caused by the economic effects of the COVID-19 pandemic, the landlord may terminate the tenancy agreement after complying with the termination requirements of the RTCRB (which require the landlord to offer a rent repayment agreement in relation to rent).

Further developments

We expect further announcements will be made over the coming days and weeks to provide more information on the progress of the RTCRB, including as to its assent date. We will monitor and report on further developments in due course.

If you would like further information in relation to the RTCRB and how this may impact your tenancy, please contact our Property team.