Details on the Commercial Landlord Hardship Fund providing grants of up to $3,000 per month per retail or commercial lease to eligible small landlords have been released.
Who is eligible?
Small commercial or retail landowners, who will suffer hardship if they waive some or all of the rent of a tenant who is financially impacted by COVID-19 in 2021 and have not claimed any land tax relief for rent reductions provided between 1 July 2021 and 31 December 2021.
Eligibility criteria:
be a landowner or trustee with total taxable land holdings of less than $5 million as at 31 December 2020, including part holdings but excluding the value of a principal place of residence;
have not claimed land tax relief for the relevant property for rent reductions between 1 July 2021 and 31 December 2021;
have gross rental income as their primary source of income (more than 50% of total assessable income) for the 2019-20 financial year;
be a landowner of the property for which an application is made;
be the landowner of a New South Wales property subject to Retail and Other Commercial Leases (COVID-19) Regulation 2021;
be a landlord with a current lease agreement that provides rent relief to the tenant(s) from 13 July 2021 that will not be claimed as 2021 land tax relief; and
attest that providing rent relief to the tenant(s) may cause financial hardship
What is the support?
The Fund will provide grants of up to $3,000 per month per retail or commercial tenancy;
The Regulation provides:
a moratorium on lockouts and other prescribed actions for the non-payment of rent, outgoings or the non-compliance of business operating hours specified in the lease for businesses that have experienced a reduction in turnover due to COVID-19, and a freeze on rent increases during the moratorium (commencing 13 July 2021)
government supported mediation to help tenants and landlords renegotiate lease agreements (including rent relief) through waivers and deferrals.
How & when to get it?
Landlords of impacted tenants must renegotiate rent with eligible tenants in good faith having regard to the leasing principles in the Code of Conduct.
Landlords must reduce rent in proportion to the tenant’s decline in turnover. For example, if a tenant has experienced a 40 per cent decline in turnover due to COVID-19, then the landlord must provide a 40 per cent reduction in rent.
As a default position, at least 50 per cent of any rent reduction must be in the form of a rent waiver with the remainder a rent deferral. Any deferred rent must be paid back over the balance of the lease term or for a period of no less than 24 months, whichever is greater.
A deferral or delayed rent payment is not rent relief for the purposes of this grant. A rent waiver or non-payment of rent from 13 July 2021 must be agreed.
Total taxable landholdings used to assess eligibility for this grant will be those of the landlord, or the trust in which a property is held. It will also include property held in Self-Managed Superannuation Funds.
The Commercial Landlord Hardship Fund will open for applications in October 2021.
Before applying for the Commercial Landlord Hardship Fund landlords must complete the following process:
Reach an agreement through either mediation or private negotiation with impacted tenants, that complies with the Retail and Other Commercial Leases (COVID-19) Regulation 2021
Obtain tenant’s approval to disclose terms of agreement for the purpose of applying for the Commercial Landlord Hardship Fund grant
Show evidence that the agreed amount has been applied to the month for which the grant is being claimed
How to apply?
Applicants must apply online via the Service NSW website.
Documentation required:
copy of a 2020 or 2021 Land Tax Assessment Notice or 2020-21 Rates Notice
copy of 2019-20 Income tax return for the relevant entity
copy of current lease agreement (or other suitable documents) with tenant showing;
- the total value of pre-COVID rent
- tenant(s) contact details
- tenant(s) Australian Business Number(s) or Australian Company Number (ACN).
Applicants must submit written details of the rent relief agreed between landlord and tenant(s), including:
rent relief start and end dates
total value and per cent of rent deferred
total value and per cent of rent waived.
For more information please visit Service NSW.
As always if you have any questions please do not hesitate to contact your Client Manager.
