As economists are bracing themselves for the next global depression on the back of the coronavirus crisis, Australian landlords are preparing to bear the fallout from the first economic tsounami that obliterated jobs in hospitality and tourism.
Australia’s Prime Minister Scott Morrison paved the way for the next economic wave of coronavirus-related calamities by telling Australian landlords that there would be no evictions for the next six months as a way of offering relief to commercial and residential tenants who could no longer afford to meet their obligations. He said that all Australians would “be making sacrifices, obviously, in the months ahead. And everyone does have that role to play and that will include landlords at the end of the day, for people who are enduring real hardship.”
Real Estate agent Jim Lazogas, active on the Oakleigh property market for the last 49 years, told Neos Kosmos that he has been inundated by emails by tenants following the prime minister’s 20 March announcement.
“Since the Prime Minister announced that there would be no evictions, I have received more than 40 emails asking for free rent or a reduction,” Mr Lazogas said.
“I have communicated with leasers and they have all agreed to discounts from 35 to 55 per cent. Nobody declined. And that’s fine that landlords are showing empathy, and I can see their point as they would rather get reduced rate than nothing at all.”
Mr Lazogas said that it is an all-round difficult situation because the Prime Minister left it open for both sides to “sit down, talk to each other and work this out” without taking into account the complexities of the situation.
For instance, a number of landlords bought properties in Oakleigh to live off and don’t receive pensions because of their investments. “I know quite a few Greek and Italian owners who have nothing else, and because of the value of their investment they cannot rely on Centrelink without being forced to sell their properties. The landlords still have to pay land tax, rates and, in some cases, mortgages where interest rates are still at work,” Mr Lazogas said, pointing out that the government is requesting owners offer this form of social welfare to tenants without, however, giving them exemptions from rates, taxes, body corp fees and other expenditure related to the investment and without giving them any grants..
“At the end of the day, tenants were not paying landlords any extra when they were running successful businesses. Some were making plenty of money for many years and lived wealthy lives. And in the world of business you need to prepare for the lean years too so it is good for commercial tenants to also realise the difficult position that landlords are in, as they cannot get Centrelink help or turn to other funding that affected businesses are getting.
A business owner himself, Mr Lazogas said that any good business man would build capital reserves to be able to pay his staff through lean times such as is the case with the coronavirus crisis.
Lack of clarity
Ange Kondos, managing director of retail lease consultants LeaseWise, told the ABC that conditions for negotiation of rental agreements remained unclear, and that not all landlords had “shown the empathy that’s required”.
“Even working with landlords, the harsh reality is some people just won’t make it through the longer this goes on,” Mr Kenos said.
Tenants Victoria, a leading tenancy legal service, praised the six-month moratorium on evictions, however the group is also confused regarding the details of flexible leasing agreements.
“Every day, we are hearing stories of renters who are being told to leave their homes … of renters being reminded that no tolerance will be shown for people who fall behind in the rent, even if they have lost their jobs because of coronavirus,” Ms Jennifer Beveridge, chief executive of Tenants Victoria, told news.com.
Billionaire John Van Lieshout is one landlord that declined his tenant Arif Memos, owner of Cowch Dessert Cocktail Bar in South Brisbane rental relief despite the government’s ban on restaurant dining. He told the ABC that businesses, especially successful ones, should use their own reserves and keep paying rent until the Government details plans to help them. He said tenants had a “moral obligation” to dip into their own pockets first before turning to landlords, especially in light of the fact that many of his tenants were “wealthy people” with holiday homes and expensive cars.
Mr Van Lieshout said people expect landlords to foot the bill, even for tenants who may have affluent lifestyles and money in the bank. “Why is it that people look at landlords and say, ‘Well landlords, you cop it’? If these people sack their staff and don’t pay any rent, they’re almost off scot-free,” he said.