Rundle: If you can’t pay the rent or mortgage…don’t

Via Guy Rundle at Crikey:

The Centrelink lines are going round the block, the government has made vague announcements of rent assistance, twitter buzzes with notes from the newly laid-off wondering how they’ll put food on the table and pay the rent and the mortgage.

Here’s a suggestion. Do the former by omitting the latter.

If you have lost most or all of your income, or are about to, don’t pay your rent, don’t pay your mortgage. Write to your landlord or bank and tell them you won’t be paying for the next X months, and that you don’t regard this as a deferral, but as non-rent/non-mortgage months.

There’s a silver lining to every turd dropping from heaven, and the shining fringe around COVID-19 is that it will make it clear just how much of our economy is composed of dead value, non-productive ownership and the payment going to it: the rent.

The rent and the mortgage swallow up 30%, 40%, 50% of our incomes. They go into the maw of a property system whose prices have been ludicrously inflated by the privatisation of urban land development, land banking and the hidden inflation of a decade of quantitative easing; pumping trillions into a global economy in which neither production nor full-time jobs rose to anything like the levels intended.

So don’t pay it. Or negotiate a sharp reduction. Or negotiate a figure which covers part of the rates and part of maintenance and repair. If the landlord says they have a mortgage to pay, tell them to go on mortgage strike.

After the virus comes…the revolution…

David Llewellyn-Smith
Latest posts by David Llewellyn-Smith (see all)

Comments

  1. SoCalSurfCreeperMEMBER

    This will guarantee a depression. The closer to normal everything stays the faster it will be to restart when things improve. If you break the linkages by this extreme forbearance they will be hard to restart. Best give cash to the bottom of the food chain and keep as much as possible intact. Evictions,
    Repossessions and mortgagee in possession sales should all continue. Throw enough cash at the weakest in society until we can wean them off as things improve.

      • See though, this is where it would be better to be a renter than a mortgage slave. Landlords will have lesser legal firepower to come after you later. Feel like a bank would.. and it’s not the renter that has a contract with the bank, it’s the landlord so… you know?

  2. My income has collapsed. I don’t think I will be able to continue to pay the silly rent we have been – and we are not over-reaching, either, it’s just a lot to pay for a place out the back of the Hunter Valley in NSW. It’s all nuts.

    I would seriously like to pay less, even none.

    But won’t it go down ass arrears? Isn’t the system setup to control and punish renters? Surely there would be repurcussions?

    I’d love to hear what other people think about this, particularly those in the know.

    • Ronin8317MEMBER

      Eviction is not possible while the tribunals remain closed, which may be for the next 6 months. Don’t go through the real estate agent : make the landlord an offer like $100 a week, or get nothing at all.

      • But sooner or later society will return to normal.
        Anyone refusing to pay rent will be added to the renter blacklist for non payment then.
        Is a lifetime of rejection for rentals or having to pay significantly above market to get in the outcome you are looking for?

      • If your base case is that eventually the world recovers, you may never rent anything (let alone buy anything) decent again. Negotiating a rental decrease is one thing, out and out default is quite another.

        And just keep in mind that if you feel the next 12 months will be broadly apocalyptic enough to justify the mass default in rental and mortgages payments , just make sure your landlord isn’t the type to turn up one night, change the locks and throw your stuff on the street….. because you know, who is going to stop them if said tribunal is closed?

        At the end of the day, your landlord may be only slightly above the pecking order than you, someone with a small business and a small asset base, maybe even lower if they are highly leveraged? If’s it’s Meriton you’re renting from, then go ahead!

        • Completely illegal to change the locks or throw you out.

          Renting in Australia does have laws governing it – land lords are not even allowed to enter beyond certain requirements – they absolutely MUST have a court order to throw you out and this can only be done by the Sherriffs.

          So no.

          • Did you read the context?
            Tribunals are closed, police aren’t interested in evicting for non payment of rent. At that point no-one is going to give a F#$K about someone getting kicked out illegally. Who are you going to appeal to? the closed tribunals?

          • Don’t pay my rent and see where you end up. F%4k the tribunal and the cops. They should have saved some money in the good times. Just like I did.

          • I thought Chris got lost and thought he was on Zero Hedge but there were no gun references.

          • No not tough but know people that are. I just pay my bills and always have. Worked at an Abattoir for 20 years. Out of work and shut down frequently in this industry. No $1000 a fortnight for me as had a $1000 in the bank. So stop whining and pay your rent.

          • Know IdeaMEMBER

            Hey Chris, we get it. Nobody with an ounce of intelligence would begrudge your hard work. But surely the answer lies somewhere between the two extremes?

    • Continue only to pay the percentage of your previous income your rent required after you have paid all necessary essentials.

      If this is zero so be it.

      Write to your landlord or agent and advise them.

      If they have any issues advise them that they will be breaking the recently announced Federal laws if they attempt to evict you and that they should be applying for Federal small business grants to bridge the cash flow short fall as a rental property is a business not personal income – do not specify what those are – its enough to put them in doubt.

      You have 3 months before they can evict you.

      • @Ronin8317 Give it a go if you wish, but don’t be surprised if the wonderful world of credit is magically shut on you for the next 5-7 years. Many of these landlords are not part of the wealthy noble class, Bankrupting them only intensifies the broad pain in the economy (a point apparently lost on someone whom subscribes to an economic forum?) You sound like just the type that would be on ACA in 6 months time complaining no one will give you are fair go, bankrupting some other mum and dad because you can (oh, and you read the tenancy act once).

        Great to see that sense of Aussie entitlement extends to all classes and creeds. Pathetic.

        Also, you seem to have forgotten the property obsession this country has, don’t be the least bit surprised if part of our ‘recovery package’ is to throw open the boarders once this is over, nothing helps headline ‘jobs and growth’ like 750,000 newly cured Chinese and Indian migrants! You may find your struggling landlord will have plenty of cashed up vibrants to offer their property to? Any appeal to ACA or TTN that you can’t find a home to rent because of them will have you trampled as just another ‘racist’.

        God speed and may Corona rid the world of greedy speculators and entitled peasants alike.

        • I commented above, I don’t know here. Does not paying your rent to a mum & dad investor actually hurt your credit rating?
          This is where it would be better to be a renter than a mortgage slave. Coz not paying your mortgage definitely hurts your credit rating.. but what exactly is the consequence of not paying your rent in a world where you cant be evicted and disease raging so landlord even too scared to come to your place?
          I feel like Landlords will have lesser legal firepower to come after you later than the bank. It’s not the renter that has a contract with the bank to pay per month you know?
          I’d probably just tell em you can’t pay if it’s a choice between feeding your kids or paying rent. Then, try and make a best effort some day to pay em back. Just Karma.

    • I’d love to hear what other people think about this, particularly those in the know.

      We have a positively geared property with a long term (older) renter. We have said we would take the amount to pay the interest – which is about ½ of the rent. We would take no-rent if the banks give us a no penalty pause as well (not accumulate interest).

      But at the end of the day, I have a well paying, stable job where I can work from home. Quantative Easing will benefit me. And I should not be financial hardship, so I won’t be kicking out the renter if he can’t pay while all this is going on.

  3. Agree…gotta crash it down to rebuild again…that was the some of the comments here in HK from the young with the system….its too skewed to the elite….whilst keeping the populace brainwashed with the great australian dream…..maybe after this settles we will once again build something rather than bulls1t property portfolios…

  4. Is there anything at all right now legally that would support people following this advice. If I wrote to a landlord saying I wasn’t go to pay rent for the rest of the year I would expect the police on my doorstep to protect the heavies hired to throw all my belongings onto the kurb asap.

  5. adelaide_economistMEMBER

    This, like most resistance strategies, only works if a critical mass of people do it. Admittedly, there’s never been a bigger likelihood of ‘class consciousness’ reawakening with all the mass unemployment which explains why a government that loves to punish and belittle people struggling to find work is acting like a benevolent and wealthy grandfather.

    I suspect the first people to do so will ‘get their heads chopped off’ so to speak to send a message, and I’m just not sure how timid we all are these days. This will require real action, not whingeing on twitter and hashtagging before going back to scrolling through instagrams of avocado toast and holidays in the sun and blogging about the forthcoming iPhone.

    If… and only if… this thing passes relatively quickly, then yes, it will be painful. Because if things go back to normal as a renter you’ll be blacklisted and as normal services come back online you’ll be hauled before the tribunal etc. I’m having visions of my landlord refusing to pay the mortgage on the place I rent while I dutifully keep paying mine…

      • BoomToBustMEMBER

        This has been our thought for a while – many many empty properties in certain areas. No rent, no black mark. Pay to have utilities etc connected.

        • boomengineeringMEMBER

          Been there done that, evicted 2 days before Christmas., no money no assets. We found a derelict house in DY to live in. Ended up legit and paying $250/wk with no increases for 14yrs.
          Vines from outside growing onto the light fittings and spider webs in all rooms, half the house fell down while we were there.

          • I squatted when I first left home — just a young guy then, bunch of mates, lots of fun, good times

  6. This kind of thinking is symptomatic of where Australian society is at.

    If you’re irresponsible enough to get a $1m mortgage with relatively normal jobs, then you’re irresponsible enough to not save for a rainy day, and irresponsible enough to become a deadbeat and not pay your bills the moment it gets a little tough.

    Who the hell gets a $1m mortgage expecting not to have a period of unemployment, dealing with major illness (whether your own or someone else’s), economy goes into recession, natural disaster, the list goes on.

    Ask to move into a mate’s garage if you can’t pay your damn bills. This is stealing.

    • Regretfully, I agree. Bail-out upon bailout because there are no loosers in the world.

      Moral hazard all round, no lessons learned, dumb-fcks continue their dumb-fvckery — and on it goes. It’s not the end of the world — you fail, you pick yourself up and you start again. Ask any small/medium-sized business owner.

    • Ha Ha @ Bat Eater …what like a mate who lives in Sydney and has converted their garage to ‘studio’ with seperate toilet & bathroom at $420 per week. Sure or the garage attached to your mates flat that he is renting on storage market at $150 per week or the inner city mate getting $280 as spare car park. SURE mates with property are so generous. Any spare bed or sleeping area tied down to Airbnb, gum tree or couch surfers:))) crash baby ctash

    • +100. The exact individuals that would whom scream from the hills when they are underpaid (rightfully so) turn into dead beat squatters the moment they think they can get away with it? And then complain when society judges them for it later.

      If you are going to go full french revolution, you better be certain the country is going with you because otherwise it will be off the gallows for you.

      • boomengineeringMEMBER

        BB, I’m not a deadbeat used to own 11 houses 7 beachfront houses nearly all out right. lost it all 1991 and had no alternative but to squat in an untenable house until we afford to pay rent which we never got behind on.
        You guys have no idea whats ahead.

    • Jumping jack flash

      But debt is SO CHEAP and houses are just SO EXPENSIVE…
      A million debt dollars just doesn’t buy what it used to, but that’s inflation for you.

    • Peachy Bagholder

      don’t worry they’ll just do this for 3 months, raise rates and profligate upon a high altar about said irresponsibility / sins. Of course all delivered within the usual abrahamic framing. See Northern Rock for the future of our ‘landlords’.

  7. I guess you will also be advising to not pay say Daniel Andrews and Tim Pallas land tax which in some cases is 50-80% of the gross rental. One case I know it is 100% of the rental. This has risen hugely in the last 10 years.
    Such a juvenile and stupid post by DLS.

    • From the group;

      “I have a few tenants telling me that they can’t pay their rent due to Corona making them lose their Job. Which I have suggested that they apply for Centrelink as they are providing service to those in need. I’m still looking to follow the contract and carry out the eviction process. I offered a 33% rent reduction for a 3 month period but they still have advised me that I should offer leniency because you can just “freeze your loan for 6 months”.
      I think that the property should be treated as a business and that even during a crisis like this the tenants should work towards finding a way to pay their rent regardless of job loss.
      I’m unsure on what’s the best solution to these type of tenants. Any advice would be great!“

      • Landlords still pay for maintenance, council rates, water rates, interest repayments, management fees, strata fees if a unit. None of these things stop (apart from maybe interest if we allow the deadbeats to stop making repayments).

        If tenants are serious they should sell their investments, dip into super, sell their car, sell the $1500 iPhone, cancel all the Netflix subscriptions, sell their jewellery, and when they’ve run through that money then go to the landlord and say this is what I can pay you per week do you accept?

        If you just stop paying your rent without going through this process you’re a deadbeat. It’s flat out stealing.

      • I have a few tenants telling me that they can’t pay their rent due to Corona
        It sounds like the majority of his tenants have not yet told him this. How many tenants does this dude have?

      • So, I just received an email from an Sydney city real estate agent.

        She was providing guidance on how to deal with rentals in this environment. She mentioned that Centrelink was instructing people to ask if their landlord requires a mortgage payment to cover the rental and if so, can the owner apply for a repayment holiday of six months (clearly Centerlink doesn’t understand that it is not a ‘holiday’ it is a deferral and one that includes compound interest I presume!)

        The fact Centrelink is telling people this is interesting and what’s more, her small inner city agency has had 20 notifications of tenants having to leave due to job losses.

      • I wonder how this landlord will go finding new tenants once they’ve evicted all their old ones, and how the new rents wlll compare to the old rent.

      • He’s right you know. These renters should beg, loot or steal to pay their rent. It’s the Aussie way to get a leg up and move onward to never ending prosperity!

  8. blacktwin997MEMBER

    Look, i’d honestly find Guy Rundle’s idea a whole lot more compelling if he were to actually lead by example and videotape the ensuing no doubt hilarious results rather than agitating for arm’s length civil disobedience. As is he’s just coming across as an irresponsible overfed flog cvnt bad advice dispenser.

  9. If the govt steps in and pay the rent for people who have lost work as a result of the virus – who is it helping?
    A) The poor renter
    B) The landlord
    C) The landlord’s bank

  10. This just goes to show how weak we are with recessions. Not even technically in one yet and we are already whinging
    29 years without one made everyone soft and fluffy with our cushioned lives
    Spent like crazy wasting our money and loaded up on non-productive debt.
    Every other country suffered and looked at us with envy while we looked back feeling smug.
    I give me no pleasure to say it but we deserve it.

    • Someones about to get truly reamed if that’s true.
      Good practical example of the problem of taking out long term contracts, to provide short term services.

    • adelaide_economistMEMBER

      Thank you. One of the best reads all day (and there’s been a few). Hadn’t even thought about the AirBNB angle. The next aspect as well will be transmission of corona virus via AirBNB. Sure hope all those people renting out properties filled out their insurance policies properly (as I’m sure they would have).

  11. Rent is not a dirty word – but it is here on MB. Let’s be a little more sensitive. The issue is exploitation or exploitative rents and a system that promotes it.
    I really don’t want the system to collapse and anarchy to reign. I do want the system to readjust so it is fair to all – if it doesn’t then i accept we should crash it. But let’s try something less fatalistic first.

    • Love in the time of Corona

      I realised (yet again) I was a bit middle class listening to the wireless about how to reach kids where they don’t have internet connections at home.

      • Jumping jack flash

        Thanks to hippy parents and no electricity I was able to get out of doing several assignments while at school, where it involved watching something on tv.

  12. SoCalSurfCreeperMEMBER

    During the GFC here in CA renters would seek credit reports from potential land lords to ensure that the mortgage was not in default. Renters that did not do this were at risk of immediate eviction when the banks took the property for sale, which was very common and a real risk.

  13. Why is there such an entitlement with rent? People don’t think of it as an investment rather just a free throw at the stumps.

    It’s no different to a company or a share, these investors are going to have their income cut and is a risk of investing and should have been factored in otherwise you’re a speculator, not an investor.

    Have a mortgage to pay? You should have bought it outright and not have leverage then.

    There’s plenty of businesses that have lost their customers aka tenants. Enjoy the good times with the bad. You could waive rent for a year and it’s probably only the gains from one of the last few months.

  14. I’m confused, isn’t there a holiday on payment of mortgages? Where you just roll the interest over but you don’t make any payments. Can’t we do the same for renters? Roll the rent over for 6 months and then pay it all back when its over. What do you mean they won’t be able to pay the higher amount back in 6 months? Any bets that both will be in the same boat.

    • Er, emphatically not. There are two classes of people in the world my friend and they are categorically not equal. You must be new to this country?

    • Jumping jack flash

      It’ll never fly. Can you imagine it? Nobody would pay the arrears. Our landlord constantly whinges to us how his other tenants are months behind in their rent. Fortunately I don’t think he has a mortgage on the place we’re renting.

      He’s about 80 years old and my greatest fear at the moment is that he catches coronavirus and dies, and then his kids sell everything to obtain enough of someone else’s debt to pay off the intererst (and principal) on their own massive mortgages and we’re out on the street.

  15. Heard today people were unable to contact the banks to negotiate a break in mortgage payments as the phones were so busy. Just goes to show the underlying level of fragility in the system.

    • Must be why CBA are not shutting up shop in face of covid vir a$$ – keeping office doors open to negotiate – dictate loan terms.. 4000 staff keep on keeping on at the office. Maybe spread it to mortgage holders covid/covert style so they all drop dead and their properties repossessed or sold for a song.

    • darklydrawlMEMBER

      There was one comment on a MSM story (re: centrelink SNAFU) so I cannot attest to the validity, but it caught my eye. Her son has purchased his first property for $1.2M with settlement on the 15th of April and has just been laid off and now has no idea how he can close the deal. I am sure (even if this one is not true) there would be plenty of folks sweating on how to make their next mortgage payment.

  16. Jumping jack flash

    “it will make it clear just how much of our economy is composed of dead value, non-productive ownership and the payment going to it: the rent.”

    Interesting concept. I would say most of it, and testing it would be extremely dangerous.

  17. There should be a bidirectional automatic passthru. In other words if the tenant cant pay the rent, the landlord gets some mortgage protection. If the landlord can no longer pay the mortgage either IP or home loan, his tenants should receive automatic rental relief, even if they can currently make rental payments in full. In other words landlords should not be able to profit from mortgage relief without passing some of that benefit through to the tenant.

    • darklydrawlMEMBER

      This makes sense, so it almost certainly will not happen. Most likely the renters are on the hook regardless and the landlord is likely to get a mortgage holiday. Meh.

Leave a reply

You must be logged in to post a comment. Log in now