30.03.2020 at 13:04
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Australia under house arrest, real estate industry demolished

It’s the most extraordinary curtailment of civil liberties in Australian history: various state government bureaucrats and police  are issuing directives confining the entire population to their homes and, for "essential workers", their homes and workplaces. Sure there are minor exceptions - we’re allowed to go shopping so we don’t starve to death, we’re allowed to exercise in household groups so we don’t kill each other, but for all intents and purposes Australia is under bureaucratic house arrest. And for now, a compliant population is accepting its governments’ assurances that it’s all for our own good.


But for the Australian real estate industry and all the people it services, this is an unmitigated disaster. In every state and territory, people are being confined to home unless they are shopping, doctoring or “essential workers” travelling to or from work. Got that? It means you have to stay at home but too bad for you if you need to buy or rent one.

The restrictions have been announced by the Commonwealth government but it doesn’t have the constitutional power to make them. So the states have announced they will and published some details on their respective websites. But as at 10 PM on 30 March 2020 the relevant directives were not even on most of the state websites! i.e. there is no official legal instrument issuing the bans that have been announced!


Queensland is the exception. On Sunday 29 March 2020  Queensland’s Chief Health Officer prohibited people from leaving their residence except for permitted purposes and she prohibited groups of more than two people who are not members of the same household from gathering in any place except for permitted purposes. Let’s assume the other states do the same and examine what this means for the national real estate industry.


First, conducting auctions or group opens for inspections are already banned in most states. Second, inspecting real estate privately, going to a real estate agent’s office or even meeting a real estate agent in the street are now also prohibited. And who wants to sell in this climate anyway? So for most agents, you’re effectively out of actual work, even if the boss keeps you on to play solitaire.


But assuming you keep your job or you are the boss, can you and your staff actually go to work? The answer is “depends”, at least based on the Queensland “direction”. In Queensland the work exception is for people “to perform work on behalf of an employer that is engaged in an essential business, activity or undertaking, and the work to be performed is of a nature that cannot reasonably be performed from the person’s principal place of residence”. The definition of “essential business, activity or undertaking” is “a business, activity or undertaking that is not prohibited by the Non-essential business, activity and undertaking Closure Direction (No.3) or another Public Health Direction”. Under that latter Direction, auctions and real estate inspections other than private inspections are “non-essential”. That means if you’re going to work to organise an auction or a non-private inspection during the prohibited period you’re also breaching the direction. More importantly, the exception is only for people “performing work on behalf of an employer”. So if you’re a director of an agency and you don’t draw a salary, you’re not an employee so you aren’t “performing work on behalf of an employer”.

In other words the wording of the Queensland direction is an utter shambles. Theoretically it means self-employed doctors can’t go to work either - that will really help the health crisis. And for that matter neither can judges go to Court, ministers of the Crown perform their duties, MP’s turn up to Parliament or police turn up to their stations! Because none of them are employees! It would be fascinating to watch the footage of Queensland Premier Annastacia Palaszczuk getting her own personal infringement notice! Who would have thought a mere Chief Health Officer could have destroyed all three tiers of government and an entire state economy with a stroke of her pen?


Anyway, for humble real estate agency directors, it’s time to draw up a quick employment contract and hang the tax consequences.


It’s also been announced that tenancy evictions are under a 6 month moratorium. As if things weren’t tough enough for the industry! We’ll write more about this shortly but it’s obvious some tenants are not going to pay their rent and this will further erode agents’ incomes. But remind your landlord clients of this: an eviction moratorium does not prevent the rental debt accumulating. Tenants can be sued for the debt without being evicted and the judgment debts can be enforced against other assets like bank accounts and cars.


And  what happens if you don’t comply with these new directions? In Queensland the maximum penalty for breaching the direction is a fine of 100 penalty units. Currently that’s $13,300, but note there's only a fine, no jail or other penalty is provided for. And agents will have plenty of time to save up for the fine, the Courts have already been put back for months by all this mayhem. Hell, why not insist on trial by jury - they’ve been put on hold indefinitely in this chaos too!


And how on earth is any of this going to be enforced anyway? The police will have had no relevant training. And what are they going to do? Interrogate real estate agency directors on whether that oral employment agreement you made with yourself after reading this really amounted to a legal contract?


The reality is our governments are trusting us to comply and we are trusting them to have got the epidemiology right. But given that Australia loses about 2,300 people to flu every year anyway and so far we’ve only lost 18 souls to Covid-19, they’d better have their sums right.

Stay tuned for further updates. And please forward the email you got about this article to your colleagues and tell them to subscribe.


P.S. At 11.00 PM on 30 March 2020 the NSW government published its new Order. We’ll post about that one tomorrow but it looks like going to work is banned only if you can't do it from home. Stay tuned.

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