Thread by @danziffer

EPIC THREAD: Remember the eviction ban that would 'fix' #COVID19 rental problems? It prevented a surge of tenants being booted, but started a debt-bomb set to explode in September. "The world is going to collapse," a housing expert told me. Here's WHY. #auspol #ausbiz

* A 6-month eviction 'ban'
* Mortgage 'pauses' for landlords
* Income support (#JobKeeper, #JobSeeker) for renters Extraordinary measures by governments and banks to prevent an eviction surge, keep 8 million renters in their homes and help landlords struggling with loans....

But they're temporary and mask a growing problem: many tenants getting "reductions" to their rent are really just deferrals, accruing huge debts they'l never be able to repay. "I'm $1,600 in arrears, which is a lot of money when you look at it," said 27-year-old Jay.

A model tenant - "Been there 3-years. Always paid my rent... on time" - the pandemic crushed Jay's employer, her income dropped to $0 and there wasn't yet income support like JobSeeker or JobKeeper. She missed 2-weeks of payments. Now, she's getting deeper into debt.

DON'T WORRY, WE HAVEN'T GOT CLOSE TO THE WORST BIT YET

Renters must negotiate with real estate agents or landlords. Some state's laws don't allow altering contracts, so any agreement is a deferral not a waiver. Property managers in different states (with 1000's of properties) say 10 per cent of tenants have asked for reductions.

HERE'S THE CLIFF:
* Half our workforce are on income support (increased JobSeeker payment or the JobKeeper wage subsidy). Both expire after six months.
* The eviction ban + the big banks' offer to pause mortgage repayments for landlords expire around the end of September too...

Shelter WA chief executive Michelle Mackenzie dreads to think about what will happen when all those supports end within days of each other. "The world's going to collapse." Ms Mackenzie wants increases to income support made permanent, and a boost to Commonwealth rental help.

Busy Sydney property manager @ewanmorton is concerned about a grim springtime."The whole world is starting to ask the question about September, October. That may be when the real carnage hits". The rapid March announcements took the heat out of the situation but didn't fix it.

Don't forget landlords, said @REINSWnews CEO Tim McKibbin. "The financial difficulties of the tenant — which are real and which need to be addressed, let there be no mistake about that — have been passed in part or in totality, across to the landlord. That doesn't get rid of it".

Most landlords have 1-property so their livelihood is linked to renters. "We have to consider where the tenant is going to be and what sort of a debt has been accumulated," Mr McKibbin said. "It's going to be difficult... for the tenant to be able to start a repayment program"

New figures from @ausbanking show more than 1-in-14 mortgages have been deferred. (429,000 - worth $153.5B)
"There's an assumption that everybody is going to get their jobs back and the tenant can start a repayment program... I think that is wearing rose-coloured glasses."

Emma Allen (Active Property Investing) says it's in the best interests of landlords to keep tenants, but $0 or reduced rent can't go on forever. "We have landlords with the ability to be able to be flexible on their rents, but we also have landlords that just won't survive it"

Beyond mortgages, landlords must pay rates, insurance, strata fees and land tax and maintain properties. "There's only so many months that landlords can survive without having the full rent in place." (Also, 1.3 million investors negatively gearing, so lose money to reduce tax)

"The challenge with kicking the can down the road is that eventually, you have to catch up to it," said @SYC_ChiefExec Paul Edginton. Many of the people his organisation helps are struggling with the accrued debt combined with unemployment and under-employment as well.

"We see this in disadvantaged communities... people on low or limited incomes fall into debt, then start to accrue penalties + interest on top... the non-payment of those debts can even start to be criminalised as courts start ordering people to pay — and they still can't pay."

Renter Jay fears that. "Governments are saying, 'We'll protect tenants'.. well I don't really think that's how it's gone. I'm not even sleeping, worrying about rent, and I know I'm not the only one. You've got a choice, pay rent or eat, and I don't really think that's fair."

But this thread is. Read the whole article here. Thanks to @abcadelaide Adelaide photographers Lincoln Rothall and Michael Clements. abc.net.au/news/2020-05-1…