#ASKDOM Q&A Session, Thursday 16th of April
Hi there. It’s Dom here and welcome to Ask Dom for the week where I am going to answer your most pressing questions alive. So if you’re joining us for the first time, please interact, ask your questions, type them in the comments section, and I can answer them live. I’m giving you my undivided attention for the next half hour or so, so that we can just jump on those questions and get them answered. So let’s just hit the ground running. Now, we’ve got one from Tracy. Tracy has said we are self-employed and have a mortgage with 26 years still owing. We’re in our 50s. We’re were unemployed at the moment and in self isolation with health issues. Tracy spoken to the bank. They’ve worked out that she doesn’t have to pay the full mortgage, but it gets tacked onto the end of the loan. Do I think that we’ll have a depression or some sort of hyperinflation because you’ve got two young kids and I don’t want to lose the house. Thank you for what you do. It’s awesome. Thank you to Tracy.
So in answer to that question, I think as anyone right now and what I’m doing in my business, in my life, I’m looking in three month blocks. So what am I going to focus on for the next three months? I can tell you that personally, I have applied in relation to mortgages and I’ve got answers back. And I can tell you that the system is not equipped to deal with this. What do I mean by that? The letter I got back was same sort of thing, this is the variation of the loan, you don’t have to pay for a few months, we’ll charge your interest only for the rest and we’ll tack it onto the end. And that’s all they basically said. Problems that I can already foresee. So I did that. That was one lender, one of our loans, and that came back like that. Problems I can foresee is, first of all, they didn’t vary the loan. To vary alone, formerly, it has to be in writing and I have to sign it. So they’re just pumping out letters because of the volume. So, firstly, that’s a breach. Secondly, their systems don’t have the power to work out interest and principle and tack it on to the loan.
So when they’re doing it in volume like this, which they are like 800,000 borrowers have approached the banks and said, “We need a variation.” And that’s only the beginning, that’s the tip of the iceberg. What their system will do, their accounting system, I know is going to charge interest upon interest. So there’s going to be a very long tail in this because I know from my business, which is thousands of clients and I’m not a big business, banks have millions of clients. Whenever a decision is made, there’s so much software and systems and processes and staff training. These are massive whole scale changes that have been done within a matter of days and weeks. And they’ve not thought it out and they’re building it as they go. So I can see my one letter from one of the big four lenders that they’ve already made errors that don’t comply with the law. I’ll keep that up my sleeve for later.
But my answer to you, Tracy, is you need the break now, if you’re not working, if you’re in self isolation, if you have health issues and young children, then you have to build your war chest, you have to do what you have to do for today. And yes, they have the right to tack it onto the end of the loan, but anything can change and everything is negotiable. And I could tell you there are a lot of opportunities out there, like I’m seeing the errors as they come through for myself and for our own clients and they’re just not ready for it. Because of this, we’re scaling up. So we’re probably one of the only few people hiring at the moment, because there is so much good talent out there. So there are people on the other side of banking and finance, top minds who I’m looking to poach in this current climate, and I’m getting the backend of their story. So I know how ill-equipped the banking and finance system is at the moment. And I can see so much opportunity with that later on.
Just pick your battles now, they’ve given you what you want, they’ve given you a holiday on your loan. Don’t flog yourself trying to pay it, worrying about what’s going to happen in 10 years time. Worry about now and keep your powder dry for the rest. And that’s a team that I’ve built, a legal and compliance team, to deal with that sort of stuff. If you want to, and I’ll absolutely leave something in the comment section for this actual online live stream.
And if you’re watching the recording, that will still be there as well, but you can book an appointment to talk to our team. I can’t say whole as far as compliance issues and what’s happening, but you have a lot of rights that you probably don’t know about. So I’ll leave a link in the comment section where you can book an appointment and we can look at your situation. And that applies for anyone who watches this. And if you’re sharing it, I want to spread the word, I want people to know their rights and to seize their rights. So share this with friends and family or anyone who’s been impacted by coronavirus.
Next question is from Benard. Benard has asked, what about property settlements? Can we defer the process? So I’m assuming Benard, you bought something either off the plan or you’ve signed a contract six weeks ago when you’re due to settle soon. You cannot, they haven’t announced any laws for deferring purchases or contracts that have been caught in the middle of this. So the law still applies to those. There may be a term in the contract that you can use that as leverage to get out of.
If it’s an off the plan, often there are, that the end product is materially different from the contract you signed. So the size of the property you were promised, the cost base, that sort of thing, there are grounds you can get out of those. Have they complied within the sunset clause? Has a strata plan been registered? That sort of thing. If it’s a straight out transaction of a property purchase and a normal contract period is four to six weeks. So either you bought it with a long settlement, I’m not sure, or perhaps it’s just come like now that it’s due to settle. And it’s not usual that you can get out of a contract unless there’s something, maybe it’s frustrated, I don’t know if the house is affected or something like that.
We’d have had cases of people who’ve bought a property with vacant possession and the seller can’t complete because the tenant says, “Well, I’m in isolation and I’m not going to move out and I can’t move.” So yeah, definitely there are angles with coronavirus. I’d have to know more about the situation, Benard, to advise further, but not as of right, are there any laws where the government have said, hey, if you’re in the middle of buying a property, you can just cancel the contract?” But there may be something in it, or by consent, you can definitely ask for a longer settlement or to delay settlement. So I would go through the agent or the counterparty, the seller, to ask to delay settlement. And depends on what your end game is, but maybe you want to book an appointment, we can take that offline.
What else have we got? Next question is Vedron. My question would be, which is a bit aside, a bit of an aside subject, but what do landlords do if tenants can’t pay rent? I know we can freeze the mortgage, but then later on, does that mean a large amount gets put onto the end of the loan and eventually we have to pay for it? Yes. So various states have bought out different codes and laws in relation to residential tenancies when the mortgage can’t be paid because the landlord is not receiving rent from the tenant. So in most states, the tenant is going to get a holiday whereby you can’t evict them. So normally, if a tenant breaches rent, you can go straight to the tribunal in your state and get them kicked out.
Now, non-payment of rent gives an adjustment period. So for example, in New South Wales, they’ve said it’s 60 days. In other states, different periods, but there is a freeze on evictions effectively. And there’s no law that they can pay nothing. They have to pay something or try and pay something. And landlords and tenants are encouraged to work it out. And as a landlord, you can ask for your land tax to be deferred or waived. Make sure you seize all these rights. I would hate it if someone came back later and in five years time said, “Oh, I didn’t know in coronavirus, I didn’t have to pay my land tax.” Make sure you’re aware of these things.
So, yes, as a landlord or as any property owner, especially if your tenant isn’t paying, you can ask to, in some states, waive your land tax, or at least defer it. Waiver is better. And they’re dealing with it case by case, but big chunk there in land taxes and other property taxes and outgoings, as well as you can ask for concessions from your lender. It may be if you’re in, a lot of people have switched, especially with the banking Royal Commission to principle and interest, where they’re paying down principal and interest, you can get just interest only which should cut your payments maybe in half. And on top of that, it may be that you can stretch out the length of the loan. It’s not ideal. Banks are going to take a loss on this as well. And that will play out over time. That’s why I said, it’s got a longer tail in it.
So seize every right you can now. And even if your tenant’s not defaulting, it may be that they will later. People coming into this crisis weren’t affected initially and are getting affected and impacted now or later on, because it’s a domino effect. It started in certain industries like services, hospitality, education, but when those people can’t pay and stop paying and then they don’t pay their rent, the knock-on effect is going to work its way through. So get on the front foot now, seize all your rights, stop all payments, you don’t have to pay, even if they’re payments you do have to pay, ask for a reduction or hardship or whatever the case may be. You have to be comfortable with uncertainty because it will take years to iron itself out. But if you pay all the money now, you’ll never get it back again. And it may be money that you didn’t have to pay or that you could negotiate down over time. Cash is king, again.
So Chris has said, “What about putting mortgages on hold that are not covered by the consumer credit code, so second tier lenders, commercial loans, that sort of thing? Are these mortgages covered under the new government rules?” Yes. So it’s all loans. It’s commercial loans as well, like for small businesses or asset finance, that sort of thing. And in any event without these laws, regardless, those loans that are not consumer credit loans are still governed by the rules of lending and especially hardships. So it depends who the lender is. If they’re a deposit-taking institution, then they under the banking code of practice. If it’s consumer credit, it comes under the consumer credit code. Otherwise, it comes under the ASIC rules. And there was a recent case for a totally commercial loan from a non deposit-taking lender. So they weren’t regulated under banking laws and it was a commercial loan. So it was a company had borrowed the money and there was no consumer credit laws applying. So it was arguable that they didn’t have to have hardship regulations. And ASIC actually took that case. It was with Prosper lending. They took that to the courts and they won.
So the answer to that question is yes, even if it’s a commercial loan, they’re still bound by fairness in contract, hardship rules. And all of those compliance issues will still apply. Again, would like to see the loan document to give that sort of advice. This is just generic. General disclaimer, guys, I’m answering questions on the fly from the information that you’re writing in. And to give you bespoke in portfolio situation, I’ve left a link in the comment section. You can make an appointment and we can get more data and information. As I said, we’re resourcing and I’m training a team to look out for the sorts of things, the loopholes, the rights that you have to make sure that you capitalize on that.
Caroline, dear Dom, Will it be a good option to buy a small house to live in now or to keep the cash, but paying rent in the meantime? Caroline, I don’t like… General disclaimer, not giving financial advice. Everyone’s situation’s different, but I would always say rent is kind of dead money. And if you are in the market to buy a property, now is the time. So if you’re joining us for the 4:00 o’clock today, I’m going to talk about distress in the market and for sales. For sales, not in the sense of, for example, people selling because the banks repossessed, but forced in the sense of what they’re calling FONGO, fear of not getting out. So there are a lot of people out there, I’m going to show you all the data, who are selling their properties because they got a lot of capital gain in good times and now they feel like the sky is falling, the world is ending, they just want to take the money and run. They don’t have mortgages often. There’s no mortgage stress for them, but they just want to exit.
So there are great buying opportunities out there where people are really negotiable. It’s not everybody, like I had a property that was on the market. I had a buyer when this all hit, they were still in a subject to finance period. So they pulled out and then put it back on the market and someone else came in and now we’re just getting joke offers, but I’m not that desperate. I thought about putting a tenant in, but I don’t want a tenant in if they’re going to stay there and squat there and I can’t get them out, if there’s some issue with the current laws. So I’m just putting that one on the sidelines, but not everybody is like me. There are a lot of people taking huge cuts to get out now.
So I would start looking if I were you, Caroline, look, you could probably do, with interest rates the way they are now, you could probably do cheaper than in paying a mortgage than you would on your rent with the market the way it is. And then you’ve got an asset, they’re backing it and it’s not dead money. Have a think about it and definitely, stick a toe in the water and look at what’s out there, you’ll be surprised. I’ve been calling it the sale of the century at the moment.
Lanshow has asked, with quantitative easing, fiat currency is falling in value, do I see cryptocurrency on the rise as the new norm for commercial operation? Well, cryptocurrency has had a bit of a checkered past. I see, actually, this is my big picture view and it’s only personal and there’ll be a heaps of people that will argue against it, but in times of crisis, people tend to go back to first principles. So there will be instances where they push new boundaries, for example, I think the digital world like this, like what we’re doing, live streaming for me as a business is definitely a new avenue, definitely replacing a physical live event where people have to. For me, there’s big overheads, big costs in business, in hiring a room and getting the AV and everything. And then there’s a hassle for clients to have to turn up and come out and see you live.
So definitely, technology advances and people will embrace change, but then there’s another school of thought where people go back to what they know. So property, bricks and mortar. And they’ll also go back to, like the US dollar is seen as safe, because it’s the reserve currency of the world. And people feel that if they go with the greenback, then they’re riding on a winner there. And also people tend to just want to, and you may have heard the argument about keeping everything local, global trade caused this, we just want to keep it local, local manufacturing and look after ourselves. So more of a sovereign state.
I believe that governments are getting more interventionalist, rightly or wrongly. We are all depending on our government. So we’re saying, “Save us, save us, give us handouts, change the laws.” The government has stepped up and taken action and said, “Yes, we will.” In times of crisis, governments tend to seize more and more power and we let them, because it’s extraordinary times, we need someone to lead, we need solutions. So they break the rules. They change the laws, even the latest sitting of parliament, instead of the Governor-General signing off on the laws, they said, “Oh, forget that, we’re wholly in lock down, just let the treasury do it.”
So things just tend to happen on the fly and they get more power. And you’re seeing in other countries, it’s very much like a big brother’s watching you, dystopian state. They’re looking at mobile phones and they’re saying to us, “Well, if you let us track your mobile phones, if we got rid of privacy laws, then we could control the virus and we could see where you are and we could catch people in breach.” And that’s why South Korea and other countries have done so well because they allow the government more power to make rules and reforms.
Anyway, that’s a long-winded question to a cryptocurrency question, but governments are against it. Governments want their own currencies. They want paper money. And I think at a time like this, we are giving more power to the government. So I don’t think that that sort of innovation or that trend change or transition will happen. It’s not people power rising up and overthrowing governments and having a different new, our own form of currency. It’s more a sovereign state of mind now where the government takes power and control. So I don’t see that happening personally.
Veronica has asked, I’m a residential landlord, not a tenant, how do I get protection? So a lot of protection. Veronica, I need to know your situation more, so I suggest you book that appointment at the link there, but I would be thinking for your situation, you would get a holiday on your loan, you’d approach at a state level, you’d get concessions on your land tax, your outgoings, that sort of thing. You may go to interest-only on your loan if you’re not already there, especially you should be doing that on an investment property. And I know a lot of our clients switched from interest-only to principal and interest because the five-year period ran out on their investment property. And now, they’re paying a lot more down on a loan every month. Now is the time where responsible lending, the whole banking Royal Commission, that’s all gone. Banks are doing deals. So if you couldn’t get an interest-only loan and they’ve been harder to get, now is the time. They’ll just switch you to interest-only. It doesn’t extend the term of your loan, doesn’t change anything.
And also, Veronica as a landlord, a lot of our clients are saying, “Oh, but I’ll get a black mark on my credit report. If I ask for hardship, that will not happen.” It won’t happen anyway under normal laws in normal times. But secondly, it won’t happen now, because they’re not allowed to. And prime minister came out the other day and said, “You can’t list someone who’ve been impacted by coronavirus for non-payment or late payment of loan repayments.”
So we have a question from Sani here. Hi, Dom, thanks for the presentation. We’re a residential landlord, we have a mortgage currently on unpaid long service leave for six months by choice. Husband’s going to receive the job key per payment as of next Monday. I mentioned cash is King, what entitlements should we take advantage of in our circumstances? So for example, there’s the land tax at a state level, outgoings at a state level, council outgoings, that sort of thing. There’s also loans holidays on your loans, variations of your loans. So they may just stop repayments and they can do that for a six month period. And then after that, they can help you transition back as you get paid work, as you come back. By making it interest-only, they will extend the term of the loan and make the repayments lower. So there’s a lot that they could do. First step is just to put your hand up.
I’d imagine your outgoings on a property where your landlord would be land tax, would be maintenance and upkeep. And tenants who are getting concessions on loans, what the government has said is, “Well, hey, you’ve got to also take a cut on maintenance of the property and all the landlord’s obligations as well.” So there’s also grounds there that they don’t get the bespoke red carpet service from the landlord because they’re not paying the full rent.
So outgoings as well as things like water rates, council rates, that sort of thing, and obviously, your land tax at that state level. Everything’s negotiable. Basically, anything you pay for that property, you should go to the person that you pay it to and say, “Hey, do a deal.” And that includes the managing agent.
We’ve got clients who are taking back their properties and managing themselves, because the agents, and I don’t mean this as a dig on agents, but if you’re sitting at home and you’ve got the time, all agent’s doing, they’re doing it on the fly, they’re going, “Oh, I don’t know.” They’re like a message service from a tenant, saying, “I can’t pay the rent. Hey, your tenant can’t pay the rent, what do you want to do?” And you’re saying, “Well, what am I right? So, I don’t know. I’ll go back to them and convey a message.” Maybe you work directly with your tenants or say to the managing agent, “Hey, how about you take a haircut on your commission for managing this property if you want to keep them there.”
What if you have tenants, but they are a company and didn’t sign the guarantee and want free rent? I would be asking your managing agent if with that situation with a property, why they didn’t get the guarantee, the personal guarantee of the corporate director, because I know when I’ve signed leases, I’ve always had to give guarantees as a director of a company. So that could be arguably negligent on their part. What if it’s just a $2 company? What if they trash the place? You’ve obviously got a bond there, but I find that agencies are great when they’ve got rules, when they’ve got regulations. In normal times, we’ve got processes. Yes, we do this for our tenants, we do this for our landlords. In times of crisis, they may not be adding value. They may go, “Well, I don’t know.” Because they don’t know. They just say, “Well, maybe talk to the tenant. Maybe you could offer them this. Maybe you could offer them that.” It’s not a guarantee of free rent.
So I would not be trusting your agent in all the circumstances to just pass on a message that they’re not paying their rent anymore. I’d get on the front foot with a negotiation and say, “Hey, let’s talk this through. What can you offer?”
You can’t just not have free rent depending on your state. If it’s a New South Wales, they don’t get a rent-free period. They don’t get to just bunker down like squatters and say, “Oh, well, coronavirus is here. So we’re not paying and we’re not moving.” They get 60 days before you go to the Residential Tenancy Tribunal. But I would be saying, “Hey, I’m going to use my rights in 60 days. So do you want to move in two months or do you want to sort something out? I am negotiable. I’m reasonable, but you’re not getting it for nothing. So what can you pay? Do you get JobKeeper? I’m going to have some of that, buddy. Otherwise, we’re going to go to the tribunal.” And I’d just being commercial about it. And if your managing agent isn’t on your side, sometimes they’re not, sometimes they’re the best friend of the tenant, I’d be getting rid of them and doing it myself.
Leslie has asked, I’m a single mom with a mortgage, is master wealth control something I should think about? I would… Okay. So, yeah. Anybody with assets or property, and if you’ve got equity in property, you are a target and that can be exposed. So I would definitely be looking at master wealth control. Again, book an appointment, we can take that offline and look at your actual assets and your situations, but it’s going to give you leverage, it’s going to protect your assets. However, that I would see it. So I would be suggesting to, everyone don’t operate in this climate and this slippery slope with your wealth exposed, because it’s musical chairs.
As you can see, there’s a lot of, the dominoes are falling, and as you can see by the questions from the community, people are saying, “Well, I’m losing money and my tenant’s not paying me. So where do I get money next?” And people are going to start becoming litigious. I’ve already said, “Well, hang on a minute. Your managing agent should have got a guarantee. Your managing agent should be protecting your rights. Do you have a claim against them? They’ve got insurance, so claim on their insurance.” There’s going to be a knock-on effect from all this. When the music stops and everyone’s grabbing the chairs, you want your chair to be protected and not up for grabs.
Reign has asked, Do we handle enduring powers of attorneys’ transfer of titles to the power of attorney? Really need this, but have other big legal issues I’m dealing with. Hard to make the decision. So, I’m just trying to think of. Well, so an enduring power of attorney is something that you get under master wealth control, but if it’s a… What I’m thinking Reign, and I’m just extrapolating here, is that you’re holding and enduring power of attorney for someone else who is now of unsound mind and can’t make financial decisions and you want to remove them from the title and put yourself on the title to the property as their attorney. That’s what I’m thinking the question is. And my question back would be, do you really need to do that? Can’t you just handle the affairs?
If you hold the power of attorney, just sign everything in the name of that person, because you’re, in law with an enduring power of attorney that’s been invoked, you are effectively legally that person. So you can sign anything, you can do anything, you can sell the property. All of that can happen at your say so on your discretion. So why are you wanting to actually get on the title if it’s not a priority for you now with lots of other legal issues? I’m not sure if you’re a master wealth control client, but we do enduring powers of attorney as part of that package. But maybe make an appointment and take that offline.
Gai has asked, is there any legislation about private business loans secured by mortgages on property? No. So the legislation, well, when I say the legislation, the Australian Banking Association. So they govern deposit-taking institutions. So Westpac, like banks who actually hold people’s savings and deposits. And what they’ve said is, “We will allow six months holidays.” The government has made recommendations to other institutions that it has no legal standing over. So for example, Scott Morrison said, “Well, this is our JobKeeper package. This is our commercial landlords code of practice.” So what they’ve said under the leasing code is that banks should give landlords a holiday when their tenants aren’t paying rent on commercial properties, that sort of federal Australia wide level. And then he said, “And I urge foreign banks, so banks offshore, banks that have led money on Australian property, can you please give us a break?” So that’s the best that he can do.
And similarly for you, if you’re a private loan, or I don’t know if you’re the lender or if you’re the borrower on a business loan, but if it’s secured by mortgage over a property, they don’t have any legal compulsion to grant hardship in those circumstances. But in my experience, they will and they do, especially because of, Gai, I’m not sure what position you are. So if you’re the lender, then there’s no compulsion on you. If you’re the borrower, then I would still be hanging my hat on that decision I talked about, the recent decision with Prosper and ASIC, where they said, “Well, effectively, yes, it was a business, but it’s a small mum and dad business. And the credit code principles still apply.” They picked out parts of the contract and said, “Well, this is unfair. That’s unfair. The font’s too small. You didn’t set it out. You were non-compliant when it came to disclosure and fairness.” And those sorts of lenders also have to give hardship relief. And they are.
In our experience, helping out debt clients and people impacted by coronavirus, business lenders are granting hardship relief. The banking industry will be knocked sideways by what’s happening. They’re going to cop a loss. Initially, now, it’s already happening. It’s happening because their current business, they’re not writing loans and they’re finding it too hard. They don’t have the money to lend out there. They’re going to the government and saying, “Hey, reserve banks, some of that bailout money, give it to us to lend out.” But their loan, their lending has virtually stopped, it hit a total wall. They’re not lending anymore. So they’ve only got their loan book to rely on, the previous loans that they’ve written. And everybody’s claiming hardships. So they’re not getting the income from that either. That’s what I mean about the dominoes falling. And it’s pretty much Rafferty’s rules.
That’s why you’ve got to get adaptive and responsive to the change. You’ve got to put your hand up. You’ve got to take advantage of every right that’s out there, because the laws to deal with this, haven’t been written yet. And it’s all going to play out over the coming years. So as I always say, cash is king, seize your rights now.
Can you negotiate 0% interest on credit cards? Yes, absolutely. You should be doing that now. You should be either moving across to balance transfer cards if you can get them or claiming hardship under the consumer credit code, going to your lender and saying hardship, stopping all payments, they can’t blacklist your credit report when you’ve claimed hardship. And just if you can still pay yet applying that payment down, but settling for cents in the dollar or stopping all interest, freezing interest altogether and stretching out repayments and paying it, just paying them $10 a month or something.
Everything is negotiable, but especially unsecured debt. So that’s credit card debt, personal loans, that sort of thing, not like a mortgage or a car loan, where they can take the asset. Not that they can right now. Anyway, that’s all frozen as well, but particularly unsecured lenders are very, very negotiable right now. You should be getting rid of debt in this climate, perfect climate to offload and shed your debt.
Elsa has asked, can I purchase a property to live in under a discretionary trust? Yes. Technically, legally, yes. You should check with your accountant first, or make an appointment and you could talk to someone in our team, but the thing is, that you may not want to do that for a few purposes. So if you’re actually living in it, you may want it to be in your name. You’d usually use a trust to stream income for tax purposes. If it’s your principal place of residence, it’s not tax deductible anyway. So it’s an extra layer of complication having it in a discretionary trust.
And secondly, is it going to affect you when it comes to things like your principal place of residence, the capital gains tax not applying, that sort of thing and whether you pay land tax or not depending on how its owned? So if a company is owning it as corporate trustee or a discretionary trust, it may affect things in that respect. You should buy in what’s right for borrowing purposes, who will the bank lend to and for tax purposes for your endgame and your strategy for that property, but technically and legally, yes, you can buy your principal place of residence in a discretionary trust.
Dallas has asked, what are my thoughts on physical silver and/or gold right now? They say that in times of crisis, gold is a safe haven, so precious metals. We saw it in the global financial crisis, probably see it again now, people who are afraid, hoard precious metals, gold and silver. Happened in the Great Depression. They had to actually outlaw it, because that was before we separated from the reserve currency, where they had to actually in those days have gold in the bank to back the printing of money. Now, we don’t have that anymore. And money can just be printed without having physical gold reserves. So in the Great Depression, they had to stop people buying and selling gold. And they had to seize the gold, because people were hoarding it and it was affecting the amount of money in circulation and there was just a finite supply of gold. So yeah, precious metals can’t be a bad thing right now.
Airbnb landlords, is there anything that Airbnb landlords can do? Yes, absolutely. So Airbnb, I see it. And if we’re talking Rafferty’s rules where there’s no strict rules, then don’t worry about whether you fit into a category or not. Put your hand up. So as a business owner, there’s government grants, there’s loans, there’s a lot of concessions you can get with the ATO. So put your hand up as a business owner. I run an Airbnb business, I’ve been impacted by coronavirus because, obviously, it shut down, illegal right now, can’t get any bookings, can’t get tenancies. And so I’ve got a cashflow issue. And register for everything you can. Secondly, put on your investor hat. So business owner on a commercial basis and a property investor, wearing another hat. So put a pause on your mortgage and your land tax on all of those sorts of things as well. As I said, Airbnb get two shots at this thing.
Annie has asked, where is the best place to put your life savings right now? Is it a better investment to transfer to a US dollar bank account? I don’t know your situation. I’m gathering that you’re storing cash. So, Annie, I wouldn’t be sending it off shore, because if borders close down and tyranny of distance, you lose control. Our banks are well-financed and liquid because the reserve bank has got behind them. And because we’ve had a culture of compliance in the last couple of years with the Royal Commission, their books are well-balanced. And the other thing is that they’ve made sure APRA, the Australian Prudential Regulation Authority, have made sure that their loan to value ratio and that sort of thing are all really compliant. They may drop a credit rating because the whole world has, but they’re all AAA. So to go down to AA class or whatever is not going to be an issue. And there’s not going to be a run on the banks here.
So the bank is fine. You may want to split it between different banks up to the government guarantee limit of 250,000, or if you’re a master wealth control client, we would put that in a bank account for the Vestey trust to keep it protected that way. So a few options there. I don’t know if sending it offshore to a US bank account is currency-risk as well. I wouldn’t be going offshore. If the Australian dollar drops lower, you’re exposed. If your cash is in Australian dollars, keep like for like in Australia, would be my top of my head answer to that.
Ross. My tenants lease expires 27th of April. And I advised, I wasn’t extending back in November. Is this now overturned and I have to extend? The current tenants were poor pay. Now you don’t have to extend that contract. So there’s no laws first of all, at a residential state level, where they’ve said, “This is the law, you have to keep your tenants, and if they’ve got coronavirus or anything like that.” The only laws they’ve tinkered with at a state level is where they’ve said, “Okay, if they’re in, we encourage you to negotiate, sort something out, because maybe you won’t get another tenant.” If you’re a landlord, people aren’t moving around at the moment. So you may not find a tenant easily.
And secondly, from the tenants point of view, try and pay something and sort it out later. And to give time to do that, they’ve put a freeze on the time in which you can approach the tribunal. So for example, I’m not sure where you’re from Ross, let’s say New South Wales, 60 days, you can’t go to the Residential Tenancy Tribunal. They’re trying to encourage you to talk within those 60 days. But if the lease is at an end, there is no contract. There’s no legal right for them to be there and they will have to vacate on that day. The government have an undone contracts. They haven’t gone in and said, “Oh, no, no, no. Well, we’re making you extend that for another six months.”
There’s a legal concept called privity of contracts. Privity means private. So contracts are only enforced as between the two parties to the contract. So that’s you and the tenant. So watch that space. If they don’t go, then you probably would still have to. It’s like anyone squatting in a property they’re not there by any legal right. You would still have to go to the tribunal to get them out like with anything.
Ryan has asked, are banks open to refinancing loans? Yeah, banks are very much open for business, it’s just that people have the fear and people aren’t going forward. So that’s why I said, it’s a great time to get in if you’re bullish, because property prices are falling, people are really motivated to sell, people are selling and getting out and banks are lending. They welcome the business. So, yeah. Definitely, look to refinance.
Max, I went to apply for JobSeeker, I’m requiring to make a very detailed disclosure about rental property purchase price, car value, mortgages, square metering, matrix of property, number of rooms, blah, blah, blah. And then for private company to fill in a 24 page disclosure about that company to calculate ownership in the company, but so much detail and all, when I thought that asset testing was not applied during COVID-19. Any comments on this approach? Yeah. Unfortunately, it’s a golden rule. Isn’t it he who holds the goal, Max, makes the rules? And the government have the money and they’re saying, “If you want us to give you a JobKeeper or whatever it is, that’s our stimulus package, these are our requirements.” So, yeah. Unfortunately, they’re still going to be public servants. They’re still going to say, “You need the form, I can’t release the money till I have the form and you won’t get around non-disclosure.” Because obviously, they’re trying to stop people, just saying, I’m fabricating or whatever, and they want to make sure of your eligibility for that.
You can try, you can say, “I need the money urgently, and this is going to take me ages to get everything that you want from my accountant.” But they’re probably going to just stick to the rules. But as I said before, everything’s up for grabs. So just say, “I read here, I read the there that you weren’t going to be strictly compliant and it was more discretionary, can I just sign up for this? Is there a short-form version?” See what they say. But at the end of the day, if they’re going to hold up ropes and you have to jump through them, so be it.
Any other questions coming through? I can’t see any at the moment, but I have left a link down in the comments section, whether you’re interactive live with me now, or you’re watching this later, you can register at that link to ask your questions. And it’ll ask you to book an appointment. Please don’t book it, just shoot the breeze or have a little fireside chat. It’s for genuine people needing help, needing questions answered. I’ve spent a lot of time and put a lot of resources into hiring the right team and training them up for coronavirus specific and hardship and an other issue questions like questions about your rights, what to do in a certain situation if you’ve been impacted by coronavirus or you’re likely to be, or you just want to build the war chest right now. They’re the sorts of areas of expertise and the sort of questions that have been asked on this webinar.
So try, and if you’re not going to turn up, don’t book the appointment, because we get slammed with these things. I set aside the time for team members to support and help those who are wanting that sort of assistance. But when people book the time and then are a no-show, it means someone else misses out on appointment who’ve may have needed it.
Is another question last minute from Ross. I’m in Victoria, but I’m a tenant in a Queensland property. So I can’t be forced to extend my lease, but they may squat and I have no way of getting them out because Queensland tribunal is not hearing cases for 60 days. So yeah, look, Ross, I understand you’re interstate, it’s going to be the state that the property is in. So if the property is in Queensland, then Queensland laws will apply. I don’t know if you’ve got a managing agent up there, but I’d be asking your managing agent what to do. Sounds like they haven’t said that they’re not vacating and they’ve still got time left on the lease. So I would be baiting your agent right now. I think everything, look at it commercially, not so much or here’s the law and here’s what I say and here’s what I’m doing, because the law is going to stop you by saying you’ve got to work with your tenants.
And even if we didn’t have coronavirus, I’ve had tenants squatting before, and it’s a nightmare. So you want to get on the front foot with this, maybe there are going to be crafty about it. So you want to get your agent acting for you and say, “Hey, want to advertise, let’s look for another tenant.” Just bait them. Just say, “Look, I might be interested in selling.” They’re going to make sure they get the tenants out. Too sweet, if there’s a commission or if there’s something in it for them. Everyone’s motivated by their own business ends. So make it in the interests of your agent to get on the front foot, to start hassling the tenants, hey, you’re moving out, strong-arming them, to make sure they stick with that vacation date of, I think, he said the 27th of April.
So start working the angles now. Unfortunately, we just can’t depend on the rules anymore. You’ve got to be air traffic control everyone with your own situation. So you can’t say, you can’t delegate and trust that your agent will do it for you or that someone else will do it. You’ve got to make sure you’re bringing the plane into land. You’re making sure it gets to the gate and you’re constantly the squeaky wheel. So I get on the front foot. I wouldn’t be waiting till the 27th, in answer to your question, Ross, and say, “Well, are you going to squat? Or are you getting out? Please, it will be really good for me if you got out.” I’d be saying now, “Right, where are you going? What are you doing? Because this is what’s going to happen. And this is what we need. And this is how it’s going to be.” And start guiding them.
People will usually respond to the alpha. And so you’ve just got to prosecute what it is that you want. And you’re within your legal rights anyway, because you’ve given notice and that’s the date that they have to stay. The laws unfortunately doesn’t mean… Having a law in place doesn’t mean that people won’t break it. And it’s a hassle when they do break it and you’ve got to hold them to account. So get on the front foot before they’re in breach.
I think that’s it for today in terms of questions. I can’t see any more coming through. So anybody who’s got anything else, as I said, any other questions, book an appointment below, I’ve made those resources available and they’re highly trained people. They will lower cost, escalate to me if needs be, if they can’t answer it, but they understand coronavirus issues, your legal rights under coronavirus, your obligations and strategies, especially for shedding debt and renegotiating contracts in the current environment, but only do it if you’re serious about doing it and if you’re going to show up for the appointment, don’t take it away from somebody else.
And at 4:00 o’clock today in our Daily Huddle, I’m going to be sharing with you exactly why there are massive opportunities right now, where they are and what you need to do to take advantage of them. And don’t forget to like and subscribe to us on Facebook so that you can join these Daily Huddles on Facebook or YouTube, wherever you’re joining us or watching this from, and share it with friends and family, so we can get the ripple effect and share the knowledge because knowledge is power. Take care everyone. And let’s talk at 4:00 o’clock today. Talk soon.