QCAT, COVID-19 & Impact Evidence

Property Management,  Property Managers

The past three months have been incredibly challenging for property managers dealing with the anxiety and stress of owners financially impacted by COVID-19 together with negotiating viable rent variations for tenants also impacted by the pandemic. With the introduction of the Residential Tenancies and Rooming Accommodation (COVID-19 Emergency Response) Regulation, we all breathed a sigh of relief because we finally had a legislative framework to help us navigate through this difficult period. 

The reality though is it isn’t all smooth sailing. Despite issuing tenants with a Show Cause Notice, after rent remains unpaid for a least 7 days, there are instances where the tenants’ proposal for a rent variation or the evidence provided of being COVID-19 impacted isn’t adequate for the owner to provide instructions for a Form 18d Variation Agreement. Once the Show Cause Notice has been issued, the tenant has 14 days to either pay the arrears of rent or provide evidence of being COVID-19 impacted.

The issue then is the wording of Section 11 (2)(b) which states: “The lessor knows, or ought reasonably to know, the tenant is or has been suffering excessive hardship because of COVID-19 emergency.”  So, if the trend of the arrears situation has arisen since 29 March 2020 and there has been communication from the tenant that they’re COVID-19 impacted, the next step is to lodge a Form 16b seeking compulsory conciliation via the Residential Tenancies Authority (RTA). Whilst the RTA has been able to assist in some cases, there have been circumstances where the tenant hasn’t provided any further evidence of their financial position pre and post COVID-19. The next step then is lodging a Form 2 Urgent Application with QCAT seeking an Order regarding the rent variation.

To prepare for lodging or responding to a QCAT application for a tenant who is COVID-19 impacted, please refer to the following:

To date there are no published QCAT Orders specific to COVID-19 although it’s good practice to regularly check the Supreme Court Library website (click here) and read through any published orders relating to residential tenancy matters.

As we all know, legislation is open to interpretation so we’ve been closely monitoring feedback from property managers who have taken a matter to QCAT. Additionally, I keep up-to-date with Tenant’s Queensland publications as it stands to reason they would be providing advice and assisting tenants. A recent article that I encourage all property managers to read relates to one of the first QCAT outcomes regarding a COVID-19 rent reduction.

The tips offered to tenants to obtain a favourable Order apply equally to owners. When preparing a QCAT application for the owner, it’s imperative you include the following evidence:

  1. Full chronological summary of all communication with the tenant seeking evidence of being COVID-19 impacted and change in their financial circumstances from pre COVID-19 to post COVID-19 together with attempts to negotiate a rent variation. When considering the evidence you’re requesting from tenants to support either the 25% or 30% criteria, evaluate the type of financial evidence obtained when the tenant applied to rent the property. This will be the basis of the type of supporting information you would be seeking from the tenant.
  2. Even though an owner may be cautious in providing evidence to support how they’ve been impacted by COVID-19, it’s imperative they do. This could be by way of an Affidavit with supporting evidence such as:
  • A change of the employment and income of the household;
  • Their financial commitments, such as a mortgage or other household debt and their attempts to have these payments put or hold or conversely the financial impact of continuing to make the payments as opposed to the increased financial burden of compounding interest or a longer loan term;
  • Impact on their Landlord Protection Insurance if there is a rent variation treated as a rent reduction as opposed to a deferment of rent; and,
  • If an owner provides an Affidavit, you should seek for the owner to also be a party to the hearing by phone in the event the Magistrate, Member, Adjudicator or JP wants to test the evidence. The other party will be provided with the evidence in advance of the hearing.

QCAT orders are subject to Appeal. This isn’t a process to initiate lightly and we recommend an owner seeks some legal advice before doing so. If they’re advised there are grounds to seek Leave to Appeal more evidence provided by the owner and discussed in the hearing will be of benefit to them.