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What do I do if my tenant cannot afford to pay rent?

If your tenant is not paying rent or has advised that they are having trouble paying rent due to the impacts of coronavirus (COVID-19), you must try to come to an agreement with them about the rent they can afford to pay.

You need to be clear on the reduction in rent you can afford to accept and seek an understanding of what your tenant can afford to pay.

There is no pre-determined rate or amount that is required for the tenant to pay. A reduced rent amount needs to be reasonable in the circumstances.

For some tenants, a lesser reduction may be enough to enable them to keep paying rent. For example, if they still have a job but with reduced hours. For other tenants who are relying on government income supports, especially those in private rental agreements, a significant reduction may be needed. As a guide, paying more than 30 per cent of their gross income in these circumstances would be considered as rental hardship.

Determine what other supports are available to you if you agree to reduce the rent for a period.

This may include:

  • insurance
  • your mortgage holder or lender
  • Victoria Government assistance, such as the land tax rebate or eligibility of the tenant for a rent relief grant which will be paid direct to you.

You can ask for supporting evidence from the tenant, such as a notice of employment termination and evidence about their Centrelink payments.