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Real Estate Agencies are asking tenants to pay rent with their superannuation, which is illegal

superannuation

This week a Melbourne real estate agency sent out aggressive emails to tenants asking for a rent decreases, instead encouraging them to use their superannuation to cover their payments.

Collingwood resident Joshua Badge received one such application, with his property manager asking him to list his expenditure on groceries, entertainment and utilities, as well as his amount of superannuation. Badge published his ordeal on Twitter, where it quickly went viral and the real estate agency were slammed.

superannuation

Despite the challenging financial situation that most Australians now find themselves in, withdrawing superannuation should only be a last possible resort, financial advisor states.

The Australian Securities and Investment Commission (ASIC) even became involved in the matter, saying they were concerned by the reports and would act swiftly to protect vulnerable consumers.

Executive Director Tim Mullaly sent out friendly reminders to agencies across the nation, pointing out that this conduct could be considered “unlicensed financial advice”  which carries a fine of up to $126,000 and five years jail for individuals, or $1.26 million for corporations.

“Tenants facing financial difficulty need sound financial guidance and potentially debt counselling,” he wrote in the memo. “Specifically pointing them to and recommending them to consider the specific possibility of accessing superannuation is, again, likely to amount to a breach of the Act.”

Despite new legislation prohibiting evictions during the COVID-19 pandemic, a new government plan has also allowed eligible people (like those who have lost their jobs or had their work hours cut by 20%) to access up to $10,000 of their superannuation this financial year, and another $10,000 next financial year.

Director of Millennial Independent Advice Kyle Frost has been quick to warn the public against withdrawing from their super unless completely necessary, as you’re effectively stealing tens of thousands from your future self.

“It’s obviously there for a reason, it’s there for your retirement,” Kyle told Junkee. “At the moment people are trying to survive so I think it’s a matter of understanding this is an option.”

“I’d be encouraging customers to think of it like a loan from your future self … you can plan to salary sacrifice and pay that loan back, it’s not an official strategy but it’s a good mindset. Paying that “loan” back will guarantee you’re still getting some compound interest — not as much as you would have, but some.”

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April 4, 2020