ASIC urged to rein in agents as tenants told to use super for rent

The corporate regulator has been urged to caution landlords and property managers against encouraging tenants to dip into their superannuation to cover rent.

Shadow assistant treasurer Stephen Jones wrote to the Australian Securities and Investments Commission this week raising concerns about "unqualified financial advice" being given by real estate agents to tenants who are struggling to pay.

Tensions over unpaid rent are rising, with some property managers suggesting tenants chip in with their superannuation. Credit:Jim Rice

In the letter to ASIC commissioner James Shipton, seen by The Sydney Morning Herald and The Age, Mr Jones pointed to media reports of real estate agents advising tenants to use the federal government's early superannuation access measures to keep up with their rent payments.

The scheme, which starts this month, allows people suffering financial hardship due to the coronavirus outbreak to withdraw up to $20,000 from their super if they've lost 20 per cent or more of their work. It has been criticised by super funds and Labor, which have described dipping into retirement funds as a "last resort" for the million Australians expected to lose their jobs by December.

Mr Jones said in the letter renters should be able to make decisions "based on financial advice that is in their own best interests and free from the conflicted interests of other agents".

"Financial advice should only be provided from qualified advisers and financial counsellors, not their real estate agent," Mr Jones said in the letter. "We ask you to consider issuing a warning on this matter."

Providing unlicensed financial advice is a criminal activity and can incur tens of thousands of dollars in fines and, in some cases, prison time.

Real Estate Institute of NSW chief executive Tim McKibbin said while it was "tragic" that some tenants might have to use their super, suggesting they might be able to access money in their fund wasn't necessarily financial advice.

He is putting together a list of resources for agents to provide to landlords and tenants advising them of available financial relief. He warned a lot of tenants in NSW believed a rental moratorium was already in place when the details were not yet available.

Prime Minister Scott Morrison announced a six-month moratorium on evictions on Sunday. It applies only to those unable to pay their rent under the current circumstances and the rent has to be repaid in future. Banks are offering affected property owners the option of deferring mortgage repayments for six months.

"Quite a few other people are rushing forward asking for rent reductions when their [financial] circumstances haven't changed," he said. "Because the rental concessions are a matter for state governments but announcements are made by federal government, a lot of people think [the moratorium] is already in place."

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