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End of Moratorium: What Next?

On March 30, 2020, a moratorium was placed for rental increases and terminations, to help those impacted by COVID-19. This temporary freeze has suspended the free market forces in demand and supply in relation to pricing. However, on March 29, 2021, ordinary tenancy law will come back into effect and free-market forces will once again come into play.

At the moment, the state government has indicated that there were no plans to extend the moratorium for the third time. What are some of the implications after the moratorium is lifted?

  • Landlords can once again ask for an increase in rent if the lease allows for it
  • Landlords can ask tenants to leave if they are on a periodic lease, in rent arrears or have not met other standards or responsibilities
  • There will be an overnight shock and this will trigger movements in the market
  • Whilst analysts predict that prices may increase by as much as 20% based on the current rate at which properties are turning over, we are experiencing an average increase of 10-13% across our properties at Time Conti Sheffield
  • The moratorium has deterred property investors creating a shortage of supply therefore, we can expect a slow return of investors into the WA market after having their confidence affected recently
  • Generally, there will be an increased number of tenants facing increased rental stress
  • Eviction and homelessness will increase

During the moratorium, fixed-term leases automatically converted into periodic leases unless they were re-signed. This means that renters can terminate their periodic lease with 21 days’ notice whilst landlords would require 60 days.

It is also likely that the recent rush on rental properties in January may have been caused by Landlords triggering a 60-day notice period to coincide with the end of the moratorium. Consequently, tenants who are on periodic leases are now interested in signing up for something fixed term before the moratorium ends.

That said, whilst landlords could not increase the rent on existing tenancies, they could set whatever price they see fit on a new tenancy, once the existing agreement comes to an end.

Another interesting change in the property market would be the impact of the home building grants offered in 2020. The WA market would welcome an estimated 8,000 houses projected to be completed by end of 2021. Many of these houses will be occupied by those who are in the rental market. This may, in turn, ease the rental pressure faced in the slightly longer term.

The end of this moratorium period will see a “day of reckoning” for Landlords who have suffered a decrease in rental income and a loss of confidence which has caused a significant number of national investors to withdraw from the WA market.

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