Commercial tenancy relief extended for NSW businesses

Kieran BowdenCOVID19

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The NSW Government has announced the reintroduction of the National Cabinet’s Mandatory Code of Conduct for Commercial Leasing to mandate rent relief for eligible tenants impacted by COVID-19. The Regulation applies to commercial and retail tenants with a turnover of up to $50 million who qualify for the COVID-19 Microbusiness grant, COVID-19 Business Grant or JobSaver Payment.

 

Relief for Tenants

Following the extension of the Retail and Other Commercial Leases (COVID-19) Regulation 2021, landlords will be required to provide rent relief in proportion with their tenant’s decline in turnover and prohibit a landlord from evicting or locking out a tenant for certain breaches of the lease unless they have first renegotiated rent and attempted mediation.

It will also require of the rent relief provided, at least 50 per cent must be in the form of a waiver, and the balance a deferral. This means:

  • if a tenant has experienced a 40% decline in turnover due to COVID-19, then the landlord must provide a 40% reduction in rent.
  • that reduction must be 20% waived and 20% deferred. The deferred part is repaid over the balance of the term of the lease or 24 months – whichever is greater.

Landlords of eligible commercial tenants cannot (unless agreed otherwise by both landlord and tenant):

  • evict a tenant for non‐payment of rent or outgoings
  • evict a tenant because the business is not open during the hours specified in the lease
  • recover a security bond or guarantee for non-payment of rent or outgoings
  • increase a tenant’s rent
  • charge interest or fees on any unpaid rent.

 

Relief for Landlords

  • A monthly grant of up to $3,000 for small commercial or retail landlords who provide rental waivers of at least the value of the grant is now available. Details of when these payments will start and how to apply for them have not yet been released.
  • Eligible commercial landowners are able to apply for relief on up to 100 per cent of their land tax liability for 2021. To be eligible, the landowner must have reduced rent for the affected tenant by at least the amount being claimed for any period between 1 July 2021 and 31 December 2021.

 

The NSW government has also committed an additional $2 million to the Small Business Commission so it can deal with a surging demand of enquiries and applications.

Applications for land tax relief can be submitted here.
 
Applications for residential tenancy support can be made here.

 

More information for landlords and tenants can be found in the Commercial Leases and COVID-19 FAQs here.