Coronavirus: Govt announces relief for homeowners - but what about renters?

As New Zealand prepares for a four-week lockdown amid the escalating outbreak of COVID-19, serious questions are being raised regarding the financial stability and housing security of tenants and their ability to meet weekly payments.

On Monday, Finance Minister Grant Robertson announced a freeze on rent increases as the country heads into level four of the four-stage COVID-19 alert system, meaning it's now imperative for New Zealanders to work together to eliminate the spread of the virus.

Stringent measures and protocols will be implemented as of 11:59pm on Wednesday, including the closure of schools and non-essential businesses. Employees, who are able to, are now required to work remotely. New Zealanders are expected to remain at home as much as possible.

Yet some tenants are worried they can no longer afford to keep a roof over their head, the lockdown leaving many New Zealanders without a steady income as businesses shut up shop. 

Although the freeze will protect renters from paying an increased amount to their landlord, it does not mean they are exempt from meeting their payments. Although the legislation is expected to go through Parliament on Wednesday, many are calling for the Government to do more to ensure tenants' security.

For homeowners however, a mortgage repayment holiday scheme will allow mortgage holders to defer their principal and interest for six months - with proof that their income has been affected by the COVID-19 crisis. This will ensure "people won't lose their homes as a result of the economic disruption".

"Yesterday the Prime Minister assured homeowners that 'no-one would lose their home' due to COVID-19. The one-third of New Zealanders who rent need this same certainty, both during the lockdown and beyond," tenants' advocacy organisation Renters United said in a statement.

But Robertson insists the Government is looking after tenants, reiterating to The AM Show on Wednesday that renters will also be protected from eviction during this turbulent time - unless they "have done something horrendous". This will ensure people "have confidence" they can stay in their home.

The AM Show host Duncan Garner argued that if landlords are getting mortgage holidays on their rental properties, they should not be allowed to receive rent payments.

"That is what I would say too, Duncan, that is what I am saying to landlords today. This is an opportunity here to really come together. Give that security and assurance to your tenants," Robertson said.

"We are looking after renters."

What the Govt is doing to protect tenants

As landlords around the country apply for mortgage deferrals, Robertson said it's up to them to arrange "what kind of rent gets paid" with their tenants.

"We still want people to pay the rent if they can, but we are saying to them you will not be evicted in this period," Robertson told The AM Show. 

"We have heard some really good stories of people who have said, 'I am going to cut your rent in half for the period of the lockdown' or 'don't worry about it' for the period of the lockdown. Have those conversations because it is about us all doing this period together."

If tenants have experienced a significant loss of income as a result of the lockdown, Robertson says support, such as an Accommodation Supplement, is available through the Ministry of Social Development (MSD).

"I just encourage people to go to MSD if they are in that situation but talk to your landlord right now about what arrangements can be made."

The minister also reiterated that many renters will be eligible to receive wage subsidies as part of the Government's COVID-19 wage subsidies package.

On Monday, Robertson announced that wage subsidies would be available to all businesses, contractors and the self-employed. If approved, employers can be paid $585.80 per week for full-time staff and $350 per week for part-time staff. The payments initially had a limit of $150,000 per business, however that cap has now been lifted.

"The financial assistance package offered by the Government to renters who lose their jobs or face reduced income, along with the rent increase freeze, should go some way to supporting renters during this uncertain period," REINZ chief executive Bindi Norwell told Newshub.

"Our advice to people is to talk to their landlord or property manager as soon as they are aware that they may be facing any financial hardship to ensure the lines of communication remain open."

What's the deal for mortgage holders?

Mortgage payments and interest will still need to be paid at a later date, but the deferral allows mortgage holders to escape "the pressure of having to make those payments", Robertson clarified.

"I think that is really important to give people that confidence," he said.

"The mortgage holiday scheme is likely to differ from bank to bank - we're still awaiting details of those schemes which are due somewhere in the next 24-48 hours," Norwell told Newshub. "At this point in time, we understand the scheme is for owner occupiers and might not apply to investment properties.

"It's important for people to understand that even though the term 'mortgage holiday' is used, that effectively means payments are on hold and end up being added to the mortgage at the end - a landlord still needs to pay, just at a later date."

Norwell also acknowledged that despite interest being deferred, it is likely to continue accruing throughout the repayment holiday period - so homeowners who opt for the scheme may end up paying more overall.

What the Govt could do differently to ensure renters' security

Renters United is calling for the implementation of new measures to ensure housing security for New Zealand tenants throughout this period.

The organisation urges the Government to introduce a total eviction ban, convert all fixed-term tenancies that expire during the outbreak into periodic tenancies, and create a dedicated service to coordinate the identification and needs-based allocation of available housing to address homelessness, overcrowding and quality issues.

To address the financial security of renters, Renters United is asking the Government to:

  • ban rent increases
  • grant an automatic right for renters to alter, terminate or reassign a fixed-term tenancy where their circumstances have changed due to COVID-19
  • ensure any mortgage relief that is available to landlords is passed on in full to renters
  • put in place financial support and rent restrictions to ensure no renters will go into debt to their landlord, third party lenders, banks or the Government to pay their rent.

"The measures will help ensure that after the crisis renters aren't trapped in debt that makes it impossible for them to recover financially and fully contribute to the country's recovery," Renters United organiser Robert Whitaker told Newshub.

"This will affect the wellbeing of renters but also the community as a whole, we need to stop the spread of the virus and secure housing is critical in this."

A petition has also been kickstarted, campaigning for a total freeze on rent payments for affected tenants.