NSW Government commits $440 million to rental relief during COVID-19
The New South Wales State Government has announced a $440 million rental relief stimulus package for landlords and tenants, splitting support evenly between residential and commercial leases.
For residential arrangements, this new commitment aims to keep tenants in rental accommodation, thus maintaining homeowners’ ability to continue mortgage repayments. It comes alongside a six-month period of restrictions on evictions based on COVID-19 economic hardship, and an overarching 60-day stop on landlords issuing rental terminations or eviction order applications due to the pandemic.
But the $220 million won’t be offered to financially strained renters in the form of grants like the Queensland rental relief measures. Instead, the bulk of the stimulus dedicated to residential renters relies on flow-on effects from landlords who will see land taxes waived or rebates offered when they accommodate tenants under financial stress.
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What does it mean for residential landlords?
The most immediate impact is the 60-day eviction halt. The intention is to provide a stop-gap before applications for the government’s Coronavirus supplement (available from April 27) bring income to renters in need, who will then theoretically be able to recommence rental payments.
The new package also requires landlords to engage in meaningful negotiations with their tenants to deal with rent debt before any other steps are taken. Incentives for landlords include land tax waivers and rebates up to 25% for assisting financially insecure tenants.
There are already concerns about the effectiveness of these measures. NSW Labor Leader Jodi McKay said, according to the ATO, only 16% of landlords pay land tax as the minimum land value threshold requiring them to do so sits at $734,000.
"We are disappointed that this is the very best that the government has come up with because it leaves out tens of thousands of people living in properties in Sydney and in rural and regional NSW," she said.
What does it mean for home renters?
These conditions essentially offer security that renters won’t be forced out of their homes, but the six-month rent deferral is conditional on negotiations with landlords.
In a statement on Monday, chief executive officer of the Tenants’ Union Leo Patterson Ross said negotiations will give all parties necessary “breathing space.”
“The detail of this proposal will be crucial however,” Patterson Ross said. “The risk of not providing a comprehensive moratorium and rent relief package is that it can open up loopholes.”
In residential circumstances, rental payments will be paused, not waived, and it’s up to individuals to negotiate how arrears will be repaid down the line.
What does it mean for businesses and commercial landlords?
The other $220 million will provide similar assistance to commercial landlords with business tenants who qualify for the JobKeeper payment (having seen at least a 30% reduction in revenue as a result of Coronavirus).
This support for small to medium enterprises (SMEs) will flow through a mandatory code of conduct, where landlords will only receive concessions if the savings are passed onto businesses. These include a land tax concession of up to 25% for the rest of this calendar year and a three-month deferral on outstanding amounts for landlords who are eligible.
Things are looking hopeful for SMEs, with the number one leasing principle in the code stating business leases can’t be cut because of Coronavirus-related missed rental payments. Relief that’s proportionate to the tenant’s losses during this time must also be provided by landlords, which will be made up of at least 50% in rental waivers and the remainder in deferrals.
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