Canberra tenants could be in rental debt: Better Renting

A report from Better Renting states between 5 to 15 per cent of tenants could be in rental debt. This would be between 5000 to 16,000 Canberra renters, although the ACT could fall at the lower end of that spectrum.

Nationwide, the report said close to 1 million renters could be in debt, with an estimated range of 324,000 to 973,000 people.

Renters accrued these debts during eviction moratoriums.

At the height of the COVID-19 pandemic in Australia, every jurisdiction besides the Northern Territory banned evictions for renters who suffered financially.

The ACT set a six-month eviction moratorium from late April to late October. Only tenants who suffered financial hardship as a result of the pandemic were exempt from being evicted. Renters in Canberra were able to negotiate a reduction with their landlord but landlords were not bound to agree to any reduction.

The report reviewed previously collected data on the amount of negotiated rental deferrals and the proportion of rent reductions.

Better Renting's report also found many tenants had avoided rental debt by going into other debt, such as credit or payday loans. As well, many renters were at risk of falling into debt due to savings running out and cuts to income support measures.

The report has prompted calls for rental debt accrued during the pandemic to be cancelled.

"Renters had lower incomes to start with, and they tended to work in the hardest-hit industries," Better Renting executive director Joel Dignam said.

"Governments have a responsibility to ensure that people aren't losing their home because of the economic impact of COVID-19. Keeping renters secure in their homes over coming months is essential to help our community stay strong and recover from the impact of coronavirus on our society."

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In the ACT, tenants with rental debt were given a three-month grace period after the eviction moratorium ended in October. Tenants who suffered financially during the coronavirus crisis have until January 31 to repay any arrears. But the measure only applied to tenants who paid their rent after October 23 when it was due.

"Our concern for the ACT is what might happen after January 31. Quite possibly there might be some people at the moment who are just staying on top of their rental repayments but struggling to make a dent in the debt they may have accrued, particularly given the high cost of renting in Canberra," Mr Dignam said.

Mr Dignam questioned whether the ACT government could use some of the funds it had allocated to the land-tax rebate scheme to help renters with their debt.

"The opportunity we have in Canberra is the government developed this land-tax incentive scheme for landlords where they give them credit if they gave a rent reduction, and they budgeted money to provide that - but what has happened is that service has been fairly undersubscribed," he said.

As of Tuesday, 932 landlords had applied for the rebate, according to figures supplied by the ACT Revenue Office. Of those, 737 had received land-tax relief.

While the ACT has performed better economically than other jurisdictions, Mr Dignam said the research had indicated the 5 to 15 per cent range still applied in the territory.

He said while the ACT could fall towards the lower end of that spectrum, it would be risky to assume people weren't in debt.

"Although Canberra has done better in general, there are plenty of people who have experienced the economic impacts," he said.

"Even if it is a lower proportion compared to other places, Canberra's rental market has remained quite unaffordable, very competitive and it's probably been harder for people to actually negotiate rent reductions and secure cheaper tenancies at this time."