NSW Government Proposed Rent Relief Package - FAQ's For Landlords

NSW Government Rent Relief Package - FAQ's For Landlords

Sarah Lefebvre
Sarah Lefebvre
18/05/2020 | 5 MIN READ

The NSW Government has announced a proposed multimillion-dollar package to help both landlords and tenants during COVID-19.


But what exactly does it mean for you as a landlord? 


To help answer some of your questions we have collated the following FAQ’s.


Please note these proposed changes have not been legislated and are subject to change.  We will update this article when the final legislated changes are announced by the NSW Government.

How is the NSW Government supporting landlords?

Under the NSW government’s $440 million package, residential landlords will be eligible for a land tax waiver or rebate of up to 25 per cent if they pass the saving on to tenants in financial distress as a result of COVID-19.

 
Eligible landlords will be able to apply for a land tax concession of up to 25 per cent 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.


To be eligible for the land tax waiver or rebate, the landlord’s residential tenants must be struggling to make rental payments and have suffered a loss of income equal to or greater than 25 per cent due to COVID-19.   

What does a moratorium on evictions mean?

The NSW State Government has legislated the following changes to evictions during COVID-19 for a period of 6 months commencing 15 April 2020.

  • A 60 day stop on landlords issuing termination notices or applying for NSW Civil and Administrative Tribunal eviction orders due to rental arrears where tenants are financially disadvantaged by COVID-19
  • The landlord is firstly required to negotiate a rent reduction with the tenant in good faith and can only seek to give a termination notice or apply for an eviction after the interim 60-day stop
  • Fair Trading can assist landlords and tenants to reach an agreement if needed
  • The NSW State Government will be extending the notice period for certain lease termination reasons to 90 days.
  • At any time during the 60 day stop and the longer six-month restrictions, Landlords can still apply to the Civil and Administrative Tribunal for a termination order.  The Tribunal will assess the application and determine whether formal rent negotiations took place, whether the impacted tenant continued to pay rent payments, the nature of the financial hardship of the landlord and the impacted tenant, availability and affordability of alternative accommodation options for the impacted tenant/s, vulnerability of the impacted tenant and public health objectives.
  • Tenants forced to terminate their lease due to the economic impacts of the coronavirus pandemic have been granted reduced penalties, with a two-week cap placed on break-lease fees.
 

What happens once the interim 60 day stop ends?

Once the interim 60 day stop ends a tenant(s) who is still unable to meet their rental obligations due to COVID-19 can only have their tenancy terminated on the basis of rental arrears if the landlord has attempted to negotiate reduced rent in good faith but the tenant has failed to do so.

 

What should I do if my tenant cannot pay rent? 

Residential landlords are required to negotiate rental payments in good faith in circumstances where a household has lost at least 25% of its income because of Coronavirus.  


It should be noted that tenants are also obliged under the mandatory code to enter into negotiations to formulate a rent relief agreement with their landlord or managing agent, prior to seeking a forced end to their tenancy.

What could I consider in a rent relief agreement?

A landlord and tenant may agree to include the following amendments in a temporary rent agreement:

  • Whether the rent will be waived or reduced
  • Rent amount payable
  • Date for agreement to be reviewed
  • Any repayment plan agreed

What information should I expect to see from my tenant to show how they have been impacted by COVID-19? 

The tenant can provide the following documents to show they are impacted by COVID-19:

  • Proof of job termination / stand down, or loss or work hours
  • Proof of Government income support
  • Proof of prior income

I am a landlord, but I can’t afford to provide a rental reduction, what can I do?

Many lenders are offering to reduce or waive mortgage payments and landlords should seek to negotiate with their lender to try to obtain an agreement to waive or reduce these. 


If this is possible, landlords should have a greater capacity to agree to a reduced rent or charges for a period of time.


The immediate 60-day stop on evictions will also allow time for the tenants to access Government income support and may allow tenants to resume paying existing rent.

Are my rental losses covered by landlord insurance?

Landlords should check their insurance policy to see whether they are covered for rental default.  Policies have different limits and requirements.

Many insurers are adopting new procedures to deal with the impacts of COVID-19 and may require evidence that the landlord has attempted to negotiate with the tenant. 

 

What happens if my tenant refuses to negotiate? 

Both the landlord and tenant should attempt in good faith to negotiate a rent reduction.

If an agreement cannot be reached, NSW Fair Trading provide a dispute resolution process for tenants and landlords to use. 


NSW Fair Trading will review tenant’s previous income and current income from all sources, including Government income support and will include any income support applications.

Tenants need to have an idea of how much rent they could afford to pay when considering negotiations.   NSW Fair Trading will contact the landlord to seek a mutual agreement on a temporary arrangement for the payment of rent.

How can I terminate a tenancy agreement during COVID-19?

Before you can terminate a tenancy agreement, the landlord needs to identify the reason why they want to terminate it. Following the NSW State Governments rulings, different processes apply depending on the reason for termination. 

For non-payment of rent or chargers due to the tenant being impacted by COVID-19 the following measures are now in place:

  • A 60 day stop on landlords issuing termination notices or applying for NSW Civil and Administrative Tribunal eviction orders due to rental arrears where tenants are financially disadvantaged by COVID-19
  • The landlord is firstly required to negotiate a rent reduction with the tenant in good faith and can only seek to give a termination notice or apply for an eviction after the interim 60-day stop
  • Fair Trading can assist landlords and tenants to reach an agreement if needed 
  • The NSW State Government will be extending the notice period for certain lease termination reasons to 90 days. 
  • At any time during the 60 day stop and the longer six-month restrictions, Landlords can still apply to the Civil and Administrative Tribunal for a termination order.  The Tribunal will assess the application and determine whether negotiations took place, whether the impacted tenant continued to pay rent payments, the nature of the financial hardship of the landlord and the impacted tenant, availability and affordability of alternative accommodation options for the impacted tenant/s, vulnerability of the impacted tenant and public health objectives.
     

End of agreement terminations

Follow the usual termination process, if the reason for termination is:

  • End of fixed term agreement
  • End or periodic agreement
  • Breach of agreement in ways other than non-payment of rent or charges 


Note: The minimum termination notice you must give your tenant is 90 days.

Termination for other reasons

Follow the usual termination process, if the reason for termination is:

  • Non-payment of rent or charges not due to tenant being impacted by COVID-19
  • Landlord is suffering hardship
  • Tenant has caused serious damage to the property or injury to the landlord or their agent or neighbour
  • Tenant is using premises for illegal purposes
  • Tenant has threatened, abused, intimidated or harassed the landlord/landlord’s agent/other person
  • Landlord is looking to sell the premises
  • Tenant has not complied with a rectification order.

Can a tenant and landlord still end a tenancy if they agree?

Yes, a tenant and a landlord can agree to end a tenancy and decide when and how this is to happen. More details on NSW Fair Trading.



The information included in this article was taken from Fair Trading NSW, Liberal NSW website, ABC News and The Australian Financial Review 

For more detailed information and example scenarios visit Fair Trading NSW

For questions about the new measures, please contact Service NSW on 13 77 88


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