Commercial tenants hit hard by COVID-19 will have more protection from eviction the NSW government says under a range of new measures in a $440 million land tax relief package announced on Sunday.
The measures apply to commercial leases where coronavirus has caused a tenant is in financial distress, including shops, cafes, gyms, hairdressers, restaurants, offices, warehouses and industrial sites, and the NSW government will offer land tax concession to commercial landlords if they assist tenants with rent reduction. There is also a freeze on rent increases.
Eligible landlords can apply for a land tax concession of up to 25% of their 2020 (calendar year) land tax liability on relevant properties. A further land tax deferral for any outstanding amounts for a three-month period will also be offered to landlords who claim the land tax concession.
The cost of the land tax relief is expected to be split evenly between the commercial and residential sectors at $220 million each.
The plan follows on from Prime Minister Scott Morrison’s announcement last week on support for business tenants with a turnover of less than $50 million with a 30% (or more) reduction in revenue due to coronavirus and also applies to JobKeeper eligible companies.
The NSW proposal includes a six-month moratorium on any new forced evictions of tenants for falling behind on the rent, having lost 25% or more of the income because of coronavirus.
Landlords or the property’s managing agent must hold “good faith” negotiations with a tenant to try and come to an arrangement.
The government has also introduced an interim 60-day moratorium on new applications for forced eviction with the NSW Civil and Administrative Tribunal if the problem is due to coronavirus. That means existing applications will now be delayed for two months before landlords can regain their property because of their own financial hardship. Evicted tenants will not have a negative finding against them.
NSW Finance and Small Business Minister Damien Tudehope said the government wanted to give retail tenants more time and options as they deal with the fallout from the COVID-19 shutdown.
“Breathing room on rent is one of the most frequently raised issues by businesses, and we want to ensure we protect retailers and offer landlords an incentive to do so,” he said.
“For any small business rent is one of the biggest fixed costs, easing this burden will help operators survive and keep people employed.”
The government will also increase staffing and funding by $10 million for the NSW Small Business Commission to deliver more mediation and advisory services to commercial parties.
Treasurer Dominic Perrottet said the initiatives offer a way forward for tenants and landlords to hammer out an agreement and includes the incentive of a land tax reduction, but added it only applies to businesses hit by COVID-19. The proposals are not a rent waiver and unpaid rent will continue to accrue as arrears over the six month period.“If your circumstances have not significantly changed you need to fulfil the terms of your existing agreement,” Perrottet said.
“I thank the many landlords who are already supporting their tenants through this period and the banks for showing flexibility with deferring loan repayments – we are all in this together and need to work together.”
The NSW government will create new laws to back up Prime Minister Morrison’s Mandatory Code Of Conduct – SME Leasing Principles During COVID-19 proposal as soon as possible the Treasurer said.