Has COVID-19 affected your income and working hours? Has it had an impact on your ability to pay your rent? Have you had to reduce the rent on your residential or commercial properties? The impact of the most recent outbreak has been extremely far-retching. However, the financial impact felt by tenants and landlords alike can be devastating. Therefore, the NSW Government have a variety of COVID-19 support packages, containing a range of different leasing considerations. In this article we answer the most commonly asked questions concerning rental and leasing relief.
Questions Covered
What relief is available for residential tenants?
Is relief available for landlords leasing residential properties?
What type of relief is available for tenants renting commercial or retail properties?
What relief is available for landlords leasing commercial properties?
Relief available for residential tenants
Tenants who cannot pay their rent in full as a result of the recent COVID-19 outbreak cannot be evicted between 14 July to 11 September 2021. This is known as the ‘restriction moratorium‘.
Eligibility
In order for tenants to be eligible for the restriction moratorium, the tenants must show:
- The tenants household income has been impact by COVID-19 by way of lost employment, lost work hours, lost income OR stoppage of employment cause the tenant or member of the tenants household were/are ill with COVID-19 and,
- A tenants household income has reduced by at least 25% and,
- Tenants have continued to pay at least 25% of the rent payable.
However, tenants will not be eligible for the restriction moratorium regarding tenancy eviction, if:
- The tenant has refused a good faith rent reduction by the landlord and,
- NSW Fair Trading deemed that rent reduction to be ‘fair and reasonable’.
Furthermore, the restriction moratorium regarding tenancy eviction will not apply if:
- Landlord is in financial hardship,
- Tenants inability to pay rent is not coronavirus related,
- Use of property is illegal,
- Serious property damage has occured,
- Tenant has threatened landlord, agent or another person (such as a neighbour),
- Landlord is selling the property.
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Get startedRelief available for landlords leasing residential properties
Landlords with tenants suffering financial distress will be eligible for a land tax concession if they provide rent reductions to their tenants between 1 July and 31 December 2021. Although a rent reduction can be an oral agreement, it is always best to place your agreement in writing. Furthermore, if you are considering a rent reduction, see our template, ‘Rent Reduction Agreement‘.
The land tax concession will be either:
- A $1,500 support grant per residential tenancy owned by the landlord OR,
- A concession of up to 100% of their 2021 payable land tax.
Relief available for tenants renting commercial or retail properties
The tenancy protection from eviction that is available to residential tenants is also available to tenants in commercial or retail premises. Therefore, this form of protection is similar to that of the ‘restriction moratorium‘ discussed above.
However, the only major difference is that a landlord will be unable to evict a COVID-19 impacted tenant, in a commercial or retail premises, without first going to mediation. It is important to remember that mediation is a great, confidential and cost-effective way of resolving disagreements or conflicts. Therefore, if there has been a dispute regarding rent reductions, the matter must first be taken to mediation. However, if the matter is not resolved at mediation, i.e. tenant refuses rent reduction, landlord will have the option of eviction.
Relief available for landlords leasing commercial properties
Furthermore, commercial landlords with tenants in financial difficulty will be eligible for a land tax concession if they provide rent reductions to their tenants between 1 July and 31 December 2021. The land tax concession will be a payment of up to 100% of their 2021 payable land tax.
Eligibility
In order for landlords to eligible for this land tax concession, the landlord must:
- Have reduced or will reduce the rent and,
- Have land tax attributable to the land leased to that tenant.
Regarding the commercial property, the landlord must be leasing the property to:
- A commercial tenant, who has an annual turnover of up to $50 million and,
- A commercial tenant, who is eligible to be approved for the Micro-business COVID-19 Support Grant, the 2021 COVID-19 NSW Business Grant and/or the JobSaver Scheme.
Key Takeaways:
Presently, the NSW Government has implemented COVID-19 support packages to cover a range of leasing considerations. The leasing considerations covered include financial relief for residential tenants, commercial or retail tenants, residential landlords and commercial landlords. For both residential and commercial/retail tenants, evictions cannot be issued by a landlord if the tenants income has suffered a 25% drop as a result of COVID-19 and the tenant has continued to pay at least 25% of their payable rent. Furthermore, if rent reductions are provided for by both residential or commercial landlords, the landlords will be eligible for a land tax concession of up to $1,500. For more information on leasing considerations, see Residential and Commercial Landlords and Tenants.
