How is the coronavirus pandemic affecting housing policy in Australia?

Examining government and sector responses to COVID-19 that impact housing, homelessness and cities policy.

Last updated 1 April 2020

In the months ahead, AHURI will keep you informed on the government and sector responses to COVID-19 that impact housing, homelessness and cities policy. This AHURI Brief gathers together policy considerations and responses from Australia’s Commonwealth and state and territory governments that relate to housing.  Please be aware that the unprecedented number of policy responses means that, while we will endeavour to keep the information on this page as up to date as possible, things are changing very quickly and some information may not be the very latest from government.

The key response across the world to the COVID-19 pandemic is for people to ‘stay at home’ with social distancing the most important factor in reducing the spread of the infection. When people can isolate themselves at home, they reduce their chance of coming into contact with anybody who may have the virus (as it appears probable people may be infected but not yet show symptoms), however the health and social benefits of safe, secure and affordable housing are not available to all Australians.

Overcrowding and shared housing

Some of the greatest risks of spreading infection come for people living in overcrowded dwellings. The more people an individual comes in contact with the greater the likelihood that the individual will get infected. In reality, in a crowded dwelling the best social isolation prevention practised by any individual is only as good as the worst prevention strategies practised by any other person living in the dwelling.

This is also the case for people living in shared housing, particularly if it is a household of independent unrelated adults. As media has reported,  not everybody has been prepared to accept that being isolated from people living in other households is necessary (or maybe that such measures actually apply to them). Indeed, preventing everybody who lives in a shared house from going out, as well ensuring everyone practises appropriate social distancing measures, is difficult, and the more people living in a house the more difficult it is to control and enforce social distancing precautions.

One impact of the virus has been an increase in people wanting to be more isolated by rejecting living in group households and, instead, living by themselves in smaller apartments.

The current social distancing rules as outlined by the Prime Minister on 29 March 2020 limit the number of people allowed in a house to two people (but exempts members of the same household). The implementation of these restrictions will be managed by individual states and territories and each may have variations on how they will be implemented.

The situation for rental properties

With many businesses unable to trade as a result of the social restrictions, income levels have already been reduced for a sizable proportion of Australians. Without income, many households are likely to have insufficient financial resources to pay their rent or mortgage costs.

On Sunday 29 March the Commonwealth Government announced a six month ban on landlords evicting residential or commercial tenants who are unable to pay their rent due to having lost income due to the virus lockdown. The details of how rental income will be protected or subsidised are yet to be announced (as of 30 March 2020) although it is anticipated ‘significant federal and state government tax breaks’, together with mortgage relief from banks, will be given to landlords who waive or cut rents.

This moratorium appears be restricted to evictions due to tenants being unable to pay rent due to the coronavirus economic lockdown. There are no details published yet for tenants who might be evicted for other virus lockdown related reasons such as tenants who are asked to leave housing that was included as part of employment duties that have now ceased. The ban on evictions also does not appear to include evictions initiated due to tenants causing damage to property or other behavioural issues.

If people or businesses can afford to pay rents or to repay housing debts (either as a homeowner or as an investor) it is expected that they will continue to do so until such time that they reach an economic trigger point where they can’t service these costs.

The Australian Banking Association has announced repayment relief for six months for commercial landlords with loans of up to $10 million who ‘agree they will not evict any tenant who is in arrears because of COVID-19’,  although currently there are no stated policies for landlords of residential properties.

Landlords with loans on their rental property and whose tenants are unable to pay rent may apply to their bank to pause their mortgage repayments. This does come at a longer term cost to the landlord as the banks will continue to charge interest on the loan and these charges are added to the loan amount.

It is unclear if tenants will be liable for repaying their ‘frozen’ rents once people are allowed to go back to work (assuming their employer has been able to restart after the closedown) and social distancing laws are relaxed. If tenants are liable, this would mean households would be paying a form of ‘double rent’ for a period in the future, i.e. paying off the amount accrued when they had no income plus the rent they are obliged to pay for their dwelling. There is a risk this ‘double rent’ scenario could reduce households’ spending capacity into the future, which in turn could severely limit any nationwide economic rebound after the pandemic.

Some state governments are also offering landlords deferrals on paying land tax in the short term, with options such as paying by instalment over an eight month time period or not paying for three months and paying over six months (this option would include interest charges on the effective loan from the State government).

While general open for inspection of properties for sale has been banned, real estate agents may take only a single prospective buyer or potential new tenant at a time through a property at a time,  which may affect tenants in self isolation or compromise social distancing laws. Real estate agents (or landlords) must ensure the person inspecting the property is not experiencing symptoms of the virus or has returned from overseas in the previous 14 days.

Home owners, sellers and buyers

The four large Australian banks have announced programs offering mortgage relief for home owners with a mortgage similar to the programs offered available to investors. As with investor mortgages, the unpaid interest may be expected to be added to the outstanding loan.

Local governments may offer rate ‘holidays’ for homeowners, although no such proposals have been announced yet.

The situation for Australians looking to buy or sell a property has also been substantially affected by the COVID-19 pandemic with the government announcing a ban on auctions and open for inspections as part of it’s social distancing restrictions. Private inspections are still permitted.

The Australian Government has also announced that, as of 29 March 2020, the Foreign Investment Review Board will ‘scrutinise every single purchase application, regardless of its value’ for international investors who wish to purchase land or assets in Australia. At face value this assumes that international investors who wish to invest in residential properties of any value in Australia will also have to apply to and be approved by the Board.

Social housing tenants

For tenants living in public housing or social housing owned/ managed by community housing providers rents are already a proportion of income received from welfare benefits (and include support from Commonwealth Rent Assistance if appropriate) so restrictions legislated due to the pandemic may not be as relevant.

Rents for those social housing tenants who had previously been able to earn income to supplement any welfare payments (and now don’t have that income) would be expected to drop to be the same as other tenants who rely on welfare payments. However, as a consequence of reduced rental income from tenants who may have paid a higher rent, community housing providers may find their financial levels dropping. This in turn may impact on their ability to provide services, such as drug, alcohol or employment programs, or non-essential maintenance.

AHURI will release a similar article in the near future considering issues and responses for people experiencing homelessness as well as other impacts on our cities and urban environments. If there is anything you would like to know more about, feel free to contact us with your suggestion.