Who will pay for the mammoth COVID-19 rental rescue plan?
Renters, landlords and insurers are headed for a showdown over who picks up the bill for coronavirus initiatives designed to stop struggling tenants from being evicted for non-payment of rent or reduced rent.
Property managers have urged landlords to step carefully around the ticking time bomb that could invalidate residential landlord insurance policies, with most waiting on insurers to provide guidance over what their stance will be.
Some insurers have already said they will refuse to write policies for new tenancy contracts, as well as changing what will be covered in future contracts, potentially leaving landlords exposed.
Insurance Council of Australia spokesman Campbell Fuller told The Courier-Mail that the industry, which had been hit by a $4.6 billon claims bill from the summer of natural disasters, was waiting on clarification from the State governments over who would foot the bill for measures and policies brought in to protect tenants.
"At the moment we have no detail on the way these schemes will operate and we're waiting on clarification from state government," Mr Fuller said.
"We're seeking to be part of the consultation process before these schemes are finalised."
He confirmed that insurers were renewing landlord cover "but many insurers have placed a temporary embargo on issuing new policies".
Asked how long the standoff would continue, Mr Fuller said: "The Federal announcement was a week ago and people have been talking about it for weeks", but there was still no word from State governments on the next step.
Graham Cooke, insights manager at Finder, a comparison website, said that while the government had clearly defined relief for commercial landlords if they were leasing to a company experiencing difficulties, "for residential landlords, this relief is not concrete and their predicament is more tenuous".
"One of the biggest problems for landlords with insurance policies is that once they reduce the rent, the volume of their maximum claim is reduced. If something goes wrong and they need to claim on insurance, they will not be able to claim the full rent."
"A further issue, particularly with domestic landlords, is that most insurance policies require the landlord to evict a tenant to claim back unpaid rent. Current government regulations don't allow them to do that, so their landlord insurance may not cover them."
He warned that "leaving rent relief to agents and landlords individually to 'do the right thing', turns the process into a lottery".
Mr Cooke called for a code of conduct to be set in place to "make things more clear for all parties involved".
The Federal Government released a new code of conduct for commercial tenancies midweek, with the carrot being an easing of land tax for commercial tenants, which the Queensland government has since confirmed.
Property Council of Queensland executive director Chris Mountford said Queensland agreed "to refund three months of land tax, defer the implementation of the foreign land tax surcharge, and defer the issuing of next year's land tax assessments for eligible landlords", but the initiative was for commercial, retail and industrial, not residential.
Antonia Mercorella, the chief executive of the Real Estate Institute of Queensland said there was a moratorium on residential evictions but no laws to enforce them.
"What this means is that the current law still stands. However, it's our understanding that the Department of Housing and Public Works will soon release legislative reforms that will become retrospective to March 29."
Property managers have urged landlords to fill in all the required paperwork in the meantime, to voiding their insurance policies.
Place director of property management Cathie Crampton said: "There are a lot payment plans and temporary rent reductions being implemented. The danger is that the insurance companies can't decide whether they will be honouring arrears claims relating to COVID-19."
Haesley Cush of Living Here Cush Partners said: "April will be the telling month" as rents fall due.
"Our position to our landlords and tenants is we need to move through this in a measured response, because a lot of the announcements have not had any details put around them. They haven't hit legislation yet. And we're waiting for information from insurance companies to protect landlords if a tenant can't pay rent and is forced to leave."
Originally published as Coronavirus: Who will pay for mammoth rental rescue plan?