Signs Of A Tourism Recovery in Asia

February 4, 2022 Edward Dever

A sure sign that Thai authorities believe that Covid-19 has turned a corner and tourism recovery may be on the way is the reappearance of the Thetsakij on Bangkok's streets.

Absent for almost two years, these Bangkok Metropolitan Authority (BMA) inspectors fine people (mainly unwitting tourists) for littering. As a general rule, you don't need to litter to be accosted by these inspectors who will claim you dropped a cigarette butt and should pay a THB 2,000 fine. It is just another scam mainly targeting tourists, just dressed in official BMA uniforms.

While the Thetsakij's reappearance on Bangkok's streets may indicate some tourism optimism (and some tourists have returned), the reality is a little different.

In December 2021, Thailand suspended its Test & Go quarantine measures following the emergence of the Omicron variant. The suspension was lifted on 1 February, however, there is no guarantee that further suspensions will not occur.

The suspension highlighted the risk for travellers trying to navigate the rules for international travel. The risk of getting stranded in another country is high, particularly if you test positive for Covid-19 and are unable to travel until obtaining a negative test or a certificate of recovery (apparently not accepted by all airlines).

Test positive on arrival into Thailand or be a close contact of a case and you face quarantine in a hospital or hotel (hospitel). While Covid-19 insurance is mandatory for foreigners as part of the Thailand Pass entry requirement, this insurance may not cover all quarantine circumstances. It pays to read the fine print.

Restarting the travel sector is not as simple as flicking a switch. The sector in Thailand and across South East Asia remains in tatters. Many companies will not be revived, lacking the funding to rebuild their businesses, rent office premises and rehire employees, let alone deal with the debts remaining from pre-Covid times.

For those able to survive, there is an opportunity to build back a leaner, more efficient operation and adopt better and more flexible work practices. The survivors may also benefit from a lack of competition in certain areas as their former competitors are liquidated.

It is pleasing to see that Pandaw Cruises will likely survive. Having announced their permanent closure in November 2021, they have now secured funding to see them through to September 2022, when they anticipate restarting operations.

Pandaw Cruises - December 2021 Update

Back on Bangkok's Streets - The 'cigarette police' who target foreign litter bugs (2013)

Warning against traveling to Thailand

February 2022

The content of this publication is intended to provide a general overview on matters which may be of interest. It is not intended to be comprehensive. It does not constitute advice in relation to particular circumstances nor does it constitute the provision of legal services, legal advice or financial product advice.

Residential Property - Are The COVID-19 Solutions Worse Than The Disease?

April 15, 2020 Edward Dever

A patchwork of different proposals is emerging in dealing with the potential residential tenancy fallout from COVID19.

There are common themes. In a number of States, land tax relief will be given in proportion to rent concessions by landlords. This ignores any investors below the land tax thresholds.

Different approaches are taken to rent arrears. In NSW, a rent deferral model has been adopted. Qld is proposing a rent waiver model.

Qld's approach also appears to allow tenants to request rental relief without providing any financial basis for that request. This increases the risk of strategic defaulters.

Landlords' inability to request financial information would require them to make decisions in a vacuum, unable to determine if a tenant's request is genuine or not.

Landlords who know their tenants will be able to determine if a request is genuine and some tenants will be forthcoming with their financial details.

However, many landllords will be flying blind. They are unlikely to agree to any relief request with the matter being sent to compulsory conciliation. This process should help to determine if the request is genuine or not.

Qld Parliament will consider these proposals on 22 April.

Coronavirus: Queensland introduces new measures to protect tenants, support landlords https://www.domain.com.au/news/queensland-introduces-a-raft-of-new-measures-to-protect-tenants-support-landlords-during-covid-19-crisis-948013/

REIQ leads revolt against Queensland Government's COVID-19 tenancy protections https://www.propertyobserver.com.au/forward-planning/investment-strategy/property-news-and-insights/112574-reiq-attack-queensland-government-s-covid-19-tenancy-protections.html

Open Letter to Landlords from The Real Estate Institute of Queensland https://www.reiq.com/wp-content/uploads/2020/04/REIQ-Open-Letter-to-Landlords.pdf?utm_campaign=MessagefromAM-14April2020-ProtectQueensland&utm_medium=email&utm_source=autopilot

Special COVID-19 Protections for residential tenants and owners http://statements.qld.gov.au/Statement/2020/4/9/special-covid19-protections-for-residential-tenants-and-owners

RTA - New forms for temporary COVID-19 tenancy arrangements https://www.rta.qld.gov.au/Newsroom/New-forms-for-COVID19.html

Land tax - Coronavirus land tax relief https://www.qld.gov.au/environment/land/tax/covid-19

Relief package for landlords and tenants – leasing principles https://www.treasury.qld.gov.au/budget-and-financial-management/revenue-and-taxation/leasing-principles/

Qld - The Residential Rental Hub https://www.covid19.qld.gov.au/the-hub

Postscript:

Qld Government to now consider stakeholder views in formulating COVID19 residential property measures. http://statements.qld.gov.au/Statement/2020/4/16/government-continues-to-listen-on-temporary-covid19-tenancy-measures

April 2020

Residential Property - NSW Proposes Support To Eliminate Evictions and Rent Strikes

April 13, 2020 Edward Dever

The NSW Government has proposed the following initiatives during COVID19:

Amount - $220 million for residential tenancy relief.

Eligibility - Applies to tenants who have lost at least 25% of their income.

Rent deferral - Any unpaid rent accrues as arrears and needs to be eventually paid by the tenant.

Moratorium - Interim 60-day moratorium for new applications to NSW Civil and Administrative Tribunal for forced evictions over COVID-19-related rent arrears.

Land Tax - Waiving land tax or providing up to a 25% rebate if accommodating tenants under financial stress.

This article sketches some broad strokes. It will be interesting to see the detail on exactly who qualifies and the limits of any relief.

NSW Government to announce $440 million coronavirus rental assistance with moratorium on forced evictions

https://www.abc.net.au/news/2020-04-13/nsw-coronavirus-to-announce-440-million-dollar-rental-assistance/12143646

April 2020

Residential Property - Fear and Confusion

April 9, 2020 Edward Dever

Media reports indicate fear and confusion in residential property markets in the absence of clear government direction in some States.

Landlords rushing to throw out tenants. Tenants planning a rent strike. Landlords cutting rents to try to secure tenants ahead of an uncertain future.

The Qld Government recognised the delay in Federal government payments stepping in with the COVID19 Rental Grant, a one-off payment of up to 4 weeks rent ($2000 max) available to those affected by the COVID19 pandemic without access to other financial assistance. The Grant is paid direct to the lessor. https://bit.ly/3e4xwR0

A sensible move tha t should ensure many Qld tenants who have lost their jobs can continue paying their rent until Federal government assistance kicks in.

It is surprising that other States do not appear to have followed Qld's lead as it should minimise evictions and possible strike action while States put in place stop gap legislation.

Landlords rush to throw out tenants in eviction ban confusion https://bit.ly/3bTqm02

Real estate agents 'abused' as coronavirus rent-strike grows https://bit.ly/2RmZzRP

Sydney landlords slash asking rents to secure tenants amid coronavirus https://bit.ly/2yCjtSi

April 2020

Qld Local Government Relief Options During COVID19

April 6, 2020 Edward Dever

Set out below, as a public service, are links to various Qld Councils setting our their relief options for property investors and owner occupiers. Some Councils are still formulating their options and are expected to release further details once the caretaker periods end following the recent elections. The list is not exhaustive.

Also below are the main Qld Government websites for COVID19 and business assistance options.

Qld Government

https://www.covid19.qld.gov.au/

https://www.business.qld.gov.au/

Brisbane City Council

https://www.brisbane.qld.gov.au/business-in-brisbane/coronavirus-support-for-brisbane-businesses

Bundaberg Regional Council

https://www.bundaberg.qld.gov.au/health-safety/coronavirus-covid-19/2

Fraser Coast Regional Council

https://www.frasercoast.qld.gov.au/news/article/783/business-permits-and-licences-automatically-extended

Gold Coast City Council

https://www.goldcoast.qld.gov.au/business/business-support-291.html

Gympie Regional Council

https://www.gympie.qld.gov.au/support-for-business

Ipswich City Council

https://www.ipswich.qld.gov.au/residents/covid-19

Lockyer Valley Regional Council

https://www.lockyervalley.qld.gov.au/our-services/disaster-management/Pages/Covid-19-Information.aspx

Logan City Council

https://www.logan.qld.gov.au/covid-19

https://www.logan.qld.gov.au/rates-fees

Mackay Regional Council

http://disaster.mackay.qld.gov.au/

Maranoa Regional Council

http://www.maranoa.qld.gov.au/services/covid-19-health-alert

Moreton Bay Regional Council

https://www.moretonbay.qld.gov.au/Council/Coronavirus-COVID-19/MBRC-Stimulus-Package

Noosa Council

https://www.noosa.qld.gov.au/covid-19-community-support-wellbeing

Redland City Council

https://www.redland.qld.gov.au/info/20072/community_safety_and_health/966/coronavirus_covid-19

Rockhampton Regional Council

https://www.rockhamptonregion.qld.gov.au/AboutCouncil/News-and-announcements/COVID19-Community-Information

Scenic Rim Regional Council

https://www.scenicrim.qld.gov.au/covid-19-1

Somerset Regional Council

https://www.somerset.qld.gov.au/

Southern Downs Regional Council

https://www.sdrc.qld.gov.au/council/disaster-management/coronavirus-covid-19-information

Sunshine Coast Regional Council

https://www.sunshinecoast.qld.gov.au/Living-and-Community/Community-Support/COVID19#utm_source=Corporate&utm_medium=spotlight

Toowoomba Regional Council

http://www.tr.qld.gov.au/about-council/news-publications/media-releases/14150-trc-economic-relief-package

Townsville City Council

https://www.townsville.qld.gov.au/about-townsville/living-in-townsville/council-support-and-information

Western Downs Region Council

https://www.wdrc.qld.gov.au/covid19/

PELEN

April 2020

Residential Property - Loss Of Rent Claims During COVID-19

March 24, 2020 Edward Dever

Agents are warning landlords of possible rent losses as tenants default due to COVID-19 job losses. The Government is stepping in with support measures to ensure people can pay rent and other expenses. However, it is worth looking at the loss of rent clauses in Landlord Protection policies and their coverage limits.

General disclaimer: read your policy yourself.

First, check you have loss of rent as part of your cover. In some policies, this is an option.

Second, read the fine print. You may be surprised at the limits. Also, check any general virus or pandemic exclusions under the policy.

Let's take a general look at Terri Sheer and EBM Rent Cover. In general, these policies will not allow a claim where a tenant stays in the property but cannot pay the rent. Court/Tribunal orders are generally needed.

First, Terri Scheer landlord insurance - now a Suncorp product.

In the event that your tenant cannot pay rent because they have lost their job due to COVID-19 closures, can you claim on your insurance?

The section you would most likely rely on is the Loss of Rent - Hardship provision. It provides cover for "Loss of rent if a court awards the tenant a release from their lease obligations, over and above the tenant's bond monies,due to hardship."

Note that, under this provision, the tenant needs a court order releasing them from their lease obligations. Also note the amount of rent covered is four weeks only.

Unless Terri Scheer relaxes the provision, it would be difficult to claim where a tenant stays in the property but can't pay the rent.

https://bit.ly/2UfLBDf

Next, EBM Rent Cover - a QBE product.

Default in the payment of rent includes:

- termination on the grounds of hardship which has been authorised by a court or tribunal.

- the tenant vacates your premises without notifying you.

- your premises cannot be occupied due to denial of access caused by the tenant refusing to vacate your premises after a lawful order for eviction or possession has been served upon them.

In the first two circumstances, a maximum of six weeks rent is payable, subject to a maximum of $1,500 per week. In the denial of access example, a maximum of 52 weeks is payable subject to the same per week monetary limit.

Without modification, the policy wouldn't allow a claim where a tenant stays in the property but cannot pay the rent.

https://bit.ly/2J6YTf1

Also note the timeframe for an order from QCAT. The timing for a non-urgent tenancy related matter following conciliation is around 20 weeks from lodgement to hearing. An urgent matter should be quicker but it will not happen overnight.

It is not quite the equivalent of hitting a blue elephant on a full moon night before claiming but there are hurdles. Landlords should read their policies carefully and push back on agents who tell them to just claim on their insurance.

Postscript:

I have added a general overview of a few more examples of loss of rent clauses under Landlord Protection insurance.

It is unclear how any proposed freeze on evictions under residential tenancy legislation will impact these provisions. I would expect the various insurance companies to issue updates following any legislative changes.

Suncorp

Suncorp will cover where a tenant ceases paying rent but does not move out. A maximum of 14 weeks is payable where there is a lease agreement with a cap of $5,000. Suncorp, in their worked example, state that they not pay the first four weeks of unpaid rent. Claims are subject to a $500 loss of rent excess. The landlord must take all reasonable steps to remedy the default or evict the tenant. A freeze on evictions may impact this requirement.

https://bit.ly/39oOGFh

Allianz

Allanz covers default in payment by a tenant provided the appropriate notices are issued, capped at 15 weeks and $10,000. If the lease is terminated by a Tribunal on the grounds of tenant hardship, the maximum limit is 6 weeks, subject to the $10,000 cap.

https://bit.ly/3apTcVv

Australian Landlord Insurance

ALI covers default in payment by the tenant or loss of rent due to court or tribunal-ordered termination of the lease due to tenant hardship, capped at 15 weeks or $18,750 and subject to maximum weekly rent of $1,250. There is a requirement to minimise rent loss and issue rent arrears and termination notices and pursue eviction. It is not clear how they would view a tenant remaining in place and not paying rent. Any freeze on evictions may work in the landlord's favour.

https://bit.ly/2UmPo1F

QBE

QBE will cover up to the weekly rent and time limit specified in the policy schedule where a tenant stops paying rent. Landlords are required to take steps to mitigate the loss or evict the tenant. QBE will not cover periods where the tenant is not required to pay rent under the lease, including rent relief granted by the landlord. There is also a limit applying two weeks after a tenant has left after a Notice to Leave is served.

https://qbe.co/2WMQpBK

PELEN

March 2020

How do you manage cash flow when there is none?

March 20, 2020 Edward Dever

By way of an update, for travel sector businesses in South East Asia (and elsewhere), business is in absolute free fall.

There is currently a patchwork of amended visa, quarantine and exclusion measures in place across most countries. Airlines are shutting down most if not all international operations, at least through May 2020. Many countries are moving towards total closure of their borders. Some that remain open are requiring travellers obtain home country medical certificates confirming COVID-19-free status. Many home countries are only testing those who show COVID-19 symptoms, ensuring the certificates are impossible to obtain. Tourists are staying away and most people are just trying to get home while they can to ride out the COVID-19 pandemic.

It goes without saying that a cash flow waterfall is not much use when there is no cash flow at all.

This health and economic disaster has occurred during the tourism high season for a number of South East Asia countries, effectively robbing businesses of the vital cash flow needed not only to fulfil high season commitments but also to cover commitments over low season when historically cash is tight.

Many companies are or will be facing insolvency situations. For many foreign-owned travel sector businesses in Asia, there is unlikely to be any local government assistance available. Businesses will need to rely on their shareholders' (hopefully) deep pockets or bank funding to keep them going. If it hasn't occurred already, travel sector businesses will be asking staff to take unpaid leave or laying off staff and generally putting the business into caretaker mode until circumstances change.

But circumstances will eventually change. And businesses need to be ready. As we are apparently seeing in parts of China, businesses are reopening and the number of new COVID19 cases are falling. Businesses need to negotiate standstill arrangements with creditors and keep their material creditors up to date on what is occurring. Cash flow waterfalls should be used within the evolving confines of cash flow. Maintaining the confidence of creditors wherever possible at this crucial moment is key. The emphasis should be on the value of long-term relationships which will continue when business interruption due to COVID19 eventually passes.

The biggest question at the moment is just when will that happen?

PELEN

March 2020