What to do if you can’t afford to pay rent


Tenancy lawyer Codie Croasdale shares what options are available for renters in financial hardship

 What you need to know

If you are renting and can’t afford to pay your rent, there are four key things you need to know.

  • In NSW, Residential Tenancy Agreements are legal contracts governed by the Residential Tenancies Act 2010 (NSW).
  • A tenant has an obligation to pay their rent in full, on or before the date set out in the agreement.
  • The landlord can take action to terminate your agreement if you fall more than 14 days in arrears: Section 88.
  • Any rent you don’t pay can result in a debt to the landlord.


What first steps can you take if you can’t afford to pay your rent?

  1. Contact your landlord or real estate
  2. Pay as much rent as possible
  3. Find a free financial counsellor
  4. Seek out services (like us) that might be able to help you


Important things to consider if you are negotiating a rent reduction

  • Get any agreement in writing.
  • Make sure your agreement clearly shows how much the rent will reduce by, the dates the reduction will start/end, and whether it is a waiver or deferral.
  • Know the difference between a deferral and a waiver.
    • Waiver: Where the landlord reduces the rent, and you don’t need to pay it back
    • Deferral: You still owe the rent and will need to pay it back later.
    • If you can’t reach an agreement, try the Fair Trading Dispute Resolution service. You can apply here


Are you a COVID-19 impacted tenant?

  • If you are a COVID-19 Impacted tenant, a Residential Tenancy Support Package up to $4,500 assistance is available to help cover rent arrears and rent reductions. This will be paid directly to the landlord or the real estate after which your rent must be waived.
  • Landlords can apply now with Fair Trading NSW. With the landlord’s consent, tenants can apply from 11 November 2021.


Could you be eligible for tenancy assistance?

  • If you are in rent or water arrears and have less than $1000 assets, then you can apply for assistance with paying for up to four weeks of arrears.
  • Must have an agreement with the landlord to stay at the property for at least 12 months. You must be able to show your income is enough to meet future rent and water rates.
  • This will only be provided once in a 12-month period.
  • This is not a loan and you do not need to repay.
  • You can apply at the Department of Communities & Justice website


In the event you have to leave your tenancy, there are a few important things you have to consider.

  • Are you on a periodic agreement?
    If you are on a periodic (‘rolling’) agreement you can terminate with 21 days notice.
  • Are you on a fixed term agreement?
    You may need to pay a break fee. This will vary depending on how long into your fixed term agreement you are.

    • Less than 25%: 4 weeks rent
    • 25%-50%: 3 weeks rent
    • 50%-75%: 2 weeks rent
    • 75% or more: 1 week rent
  • Ask your landlord whether they might agree to waive this. Get any agreement in writing.


Hardship grounds

  • Tenants can apply to the Tribunal under Section 104 of the Residential Tenancies Act  to have their fixed term agreement terminated.
  • The Tribunal will look to the special circumstances of the case to decide whether the tenant would suffer undue hardship if the agreement were not terminated.
  • The Tribunal has discretion to waive some or all of the break fee.
  • Tenants do not need to serve a Notice to Terminate and can apply directly to the Tribunal. But it is still a good idea to contact your landlord to let them know what you are doing so you can try and reach an agreement outside of Tribunal.
  • Mark your application as ‘URGENT’ and provide reasons why the matter should be heard urgently.
  • Apply within 28 days.


How can you find alternative accommodation?

  • If you have a low income and are at risk of homelessness, consider applying for housing.
  • Wait lists are long. But there are many reasons to apply for housing, even if you do not intend to stay on the Housing Register. For example, tenancy assistance to help you pay arrears
  • If you are a person with a disability, experiencing domestic violence, have experienced financial shock, or if are a young person, or veteran then you may be eligible for Rent Choice Assistance.
  • You can apply online or by calling 1800 422 322


Bond loans

The information on this page does not constitute legal advice and is current as at 9 November 2021. If you need advice about your current situation, contact our tenants’ advocates below.