Tenants Could Enjoy More Benefits In 2021 - What Can Commercial Landlords Expect? 

12.04.21 08:00 AM Comment(s) By Assetsoft

Tenants Could Enjoy More Benefits In 2021 - What Can Commercial Landlords Expect?

It’s been a year already since COVID-19 became a global crisis. It gave way to countless government measures to keep the health and financial consequences at bay. 

  

Many of these regulations were supposed to end in these months, but the crisis isn’t quite over yet. Several governments have announced extensions on aid plans, primarily eviction moratoriums. 

  

What does that mean for commercial property managers? If you’re unsure of what you can do about it, make sure to contact our strategy and leadership services for a fantastic edge. 

The UK’s extension on landlord restrictions 

The UK recently made headlines because it prolonged eviction moratoriums. It extended its forfeiture ban for three months, and it restricted landlords’ ability to demand debt repayments. 

 

Additionally, it has also claimed that it intends to review current commercial lease legislation this year. It claims it's necessary to reconsider several issues related to the current Landlord & Tenant Act and rent payment models. 

Is it only for financial complications?  

The most important consideration for this extension is that eviction bans are solely for those who can’t pay rent due to the pandemic’s financial damage. 

 

That means that other contract breaches still entitle landlords to evict tenants. The measure aims to aid tenants suffering from complications outside of their control. 

What does it mean for landlords? 

It's simple; landlords won't be able to evict tenants who failed to pay for their rent and debts within the announced period. However, they're not entirely at a loss. 

 

If they can prove that tenants can pay rent but don't do so out of a will, they could gain leverage with the court. Unfortunately, it's still a considerable setback for recovery. 

Mutual agreement is still fundamental 

If the pandemic proved one thing, it’s the importance of nurturing healthy landlord-tenant relationships. This lesson will remain vital for landlords in these additional months. 

 

Discussing conditions with tenants and offering alternatives could result in the same consideration from them. That's critical when they have the advantage of these restrictions. 

Is Canada following this example?  

Canada has employed similar measures to its peers: rent relief, lower mortgage rates, and eviction bans. It has also implemented stricter regulations regarding standard area maintenance and social distancing. 

 

Recently, the government also extended its current regulations. While it extended rent evictions, the most noticeable difference comes with rent increases. It’s an additional restriction compared to the UK, but it comes with intriguing advantages for landlords. 

Rent increases remain frozen 

Canada extended its rent freeze until July 10th this year. Any increase set before that date isn’t valid, and tenants don’t have to pay the additional amount until the period ends. 

 

Additionally, landlords can’t combine rent increases from this year and the previous one. This year’s increase can’t surpass 1.4% either. 

Debt repayment period 

Rent repayment also received a large time frame for owed amounts from March to August last year. 

 

This period starts when the landlord provides the repayment plan, and it ends on July 10, with the rent freeze. Tenants must pay instalments on the exact due date for rent. 

Unpaid rent evictions 

However, Canada has been somewhat flexible with rent evictions due to financial difficulties. If the tenant failed to pay their total rent by the moratorium's end-time, landlords could evict them. 

 

Additionally, landlords can send a notice to end the tenancy if the tenant fails to comply with the repayment plan by the period's expiration. 

Advantages for landlords 

Naturally, this means landlords aren't entirely at a loss in this case. We need to consider that Canada has been considerably supportive of all parties. 

 

While these restrictions are primarily beneficial for tenants, insightful managers can leverage these exceptions to prevent tenants from abusing these measures. 

The US: Eviction moratorium extensions as well  

The US has also announced that it would prolong eviction bans, but that’s not the only approach it’s taking. Additionally, it has provided several guidelines for businesses to assess who’s eligible for this protection. 

 

We also need to consider another vital difference between the US and other countries: relief bills. It’s one of the few countries delivering a direct financial stimulus to citizens—and even fewer sending checks to families. 

 

Biden’s administration also kicked off the year with a new stimulus check, which we also need to consider. 

Decisions from the CDC  

The CDC has been the primary authority behind most health measures in the US, and it recently extended the federal moratorium for the entirety of March. 

 

However, further extensions are possible, yet the total length isn't precise right now. Early March also saw the signing of an additional rescue bill. 

Not everyone is eligible for eviction moratoriums 

Again, this moratorium is only for tenants who can’t pay rent. It doesn’t forgive debts, and tenants are still eligible for eviction if they breach other contract terms. 

 

Additionally, residential and commercial measures vary considerably in different states. A legal advisory will prove invaluable for any landlord and tenant in the upcoming months.  

The latest relief bill: Did it aid tenants?  

Last year closed with a significant relief bill providing $25 billion for tenant assistance, aimed for rent and utility overdue. 

 

However, renters need to prove their eligibility for the government relief bill. That means showing that their income has been affected considerably, and they can't pay rent for reasons outside their control. 

Considering the future: Other proposals from Biden   

Biden has announced ambitious tenant protection measures for the future, but most of them focus on the residential real estate market. 

 

However, rent assistance and greater eviction protections could hinder financial recovery for many commercial landlords. Additionally, individual state proposals could offset or worsen the effects of these restrictions. 

Is Australia an exception?   

As many of its emergency support measures start lessening, they’re yet to announce an extension for eviction bans. 

 

It’s an uncommon sight among other countries strengthening their restrictions. While the moratorium is still ongoing in most of the territory, it has ended in many cities. 

 

However, headlines could be misleading, as different cities have decided to extend their bans. For instance, the capital territory extended its ban until April 30th. That means that the most extended deadline is still a couple of months shorter than the UK. 

Are eviction moratoriums ending? 

Most eviction ban periods are reaching their deadline. Many states have ended their restrictions. Some closed last year with no eviction moratoriums in place. 

 

However, not all regions are ending their eviction bans. Some have extended the period until the end of March or April, but not more than that. 

No news about extensions  

The primary reason why little is known about these regulations is that the government hasn’t released an official statement. Most of that responsibility has been left to each city. 

 

On the other hand, there has been considerable silence since the beginning of March, so there are still chances for official extensions to release nationwide. 

Landlord-tenant relationships are more crucial than ever 

In states where eviction moratoriums have been lifted, nurturing a positive relationship with your landlord or tenant is critical. 

 

Many landlords have excellent tenants who’ve failed to pay rent. With the eviction ban ending, keeping these tenants despite financial difficulties could be a worthy long-term investment. 

New Zealand: A more liberal approach?    

New Zealand seems to be the most liberal region regarding its market intervention. So far, notice periods for ending tenancies—and the valid reasons—have been the only target for the latest regulations. No news on outright eviction bans has surfaced. 

 

Additionally, rent increases have been regulated considerably lightly. They've extended the allowed period to a year from six months and temporarily froze rent increases between March and September last year. 

 

If you're unsure whether you can increase your rent and how much, consider working with an expert financial service

Ending tenancies depends on their type 

Not all tenancy categories are eligible for the eviction moratorium. Landlords can’t end fixed-term tenancies before the term’s conclusion. 

 

However, periodic tenancies can end if the landlord provides the proper notice. There's no specific period for delivering the notice, but it's best to give the tenant enough time to relocate. 

What about rent increases?  

Since September 26th, the rent freeze isn’t in effect. That means landlords have been free to increase their rent for a while now. 

 

However, they must wait for a year before increasing rent, and no additional increases can’t take place within 12 months. Fixed-term leases must allow for increases in the agreement. 

Can landlords decide freely? 

There’s no regulation limiting the size for the increase, only how to do it and the tenant’s option in case of a disagreement. 

 

Additionally, landlords and tenants can agree on rent increases beyond 12 months. If the increase benefits the tenant (property improvement or a better agreement, for instance), the rent increase is possible. 

Are tenants “out of luck”? 

The most important takeaway from this analysis is the word “agreement.” Tenants must grow a good relationship with their landlords if they wish to keep their lease. 

 

We must consider that a more substantial recovery for landlords could benefit tenants. Especially if they're in a strong industry, it'll be easier for landlords to accommodate leases to their tenants' needs. 

Assetsoft

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