Real Estate

Be Prepared – Renters and Homeowners

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In 1907, Baden-Powell, an English soldier, devised the Scout motto: Be Prepared.  The moto was subsequently published in Scouting for Boys in 1908.  In that publication, Baden-Powell explained that Be Prepared means “you are always in a state of readiness in mind and body to do your duty.”  In essence, Baden-Powell wanted young people equipped to react quickly to an emergency.


About a century later, those words should be ringing out loud for those who face a worrying situation i.e. renters and homeowners.  It’s a situation that may lead to a landlord eviction notice or a default or foreclosure action by the bank against the hapless homeowner.


Nothing could have possibly prepared us for what we all are facing – but the issue is an unavoidable one.


The 14 day State of Emergency might sound like a fortnight off work. But it isn’t for the renters.  What will happen if the SOE is prolonged for another fortnight or even a month or two?


The reality of the situation for many renters in the country is that a portion of their fortnightly pay is withheld by the employer and then accumulates until sufficient for the monthly rent to be paid.  It’s called salary sacrifice.  Miss a couple of days off work or even a week and you can find your portion of the sacrifice from your salary docked.


Other employees are more fortunate.  Their employer pays the rent directly to the Landlord  regardless of their “days off work”.  It’s comes as part of the employment package.  They’re the lucky ones.  But not so the majority.


The majority rely on salary sacrifice or worse pay rent from their “take home” pay.  These are average Papua New Guineans.  The rates are already bad enough, missing a month our two is quite simply financial suicide.


With the current situation of an SOE and an unpredictable month or two, that’s the sad reality of the situation – uncertainty and anxiety.


Landlords on the other hand aren’t better off, especially for those who still have to pay the mortgage.  If renters don’t pay their rent, landlords may have little choice but to exercise their legal right to warn and if all else fails, the inevitable eviction notice.


You can’t blame the landlords too – they got bills to pay.


And this is the predicament the renters and homeowners find themselves in – if they don’t comply with the agreements they entered into, then there’s a real chance landlord and banks will exercise their legal rights.  Even under the current diabolical circumstances where COVID-19 is running riot globally, there is nothing illegal with their actions (if they do exercise their rights).


So, is there a possible solution to this?


Michael Berkman, MP for Maiwa in Queensland, in a tweet relevant for the Queensland market proposed what he terms as a “rent and mortgage” holiday.  Essentially, the idea is to ban evictions and protect homeowners from default or foreclosure.


The sticky point to achieving a “rent and mortgage” holiday is that it can’t be done without the necessary laws in place.  Currently, there may be no such laws which is why he is pushing for Parliament to sit and make the relevant laws.


Renters and tenants should be in contact with their landlords and bankers.  Positive and open  communication about ones situation can lead to healthy outcomes under these unprecedented circumstances.  Obviously, there are landlords who may show compassion and others perhaps worried about their own circumstances unsurprisingly a little less sympathetic.  Whatever the case, making contact is the first step.


The same should apply to employers too.  They’re finding things tough and some already considering laying off staff.  But again, you never know what response you’ll get if you don’t ask.


Parliament here is expected to sit early next month and the issue of renter and homeowner should definitely be on the agenda for discussion.  It’s an important one to not discuss.


Surely, Papua New Guineans cannot be left homeless at the worst possible time.


With an unpredictable future ahead, we need to Be Prepared.