Commercial landlords in New South Wales will now be required to offer rental relief to tenants with an annual turnover less than $50 million under an extended state support scheme.
The NSW government last week announced the reintroduction of national cabinet’s Mandatory Code of Conduct for Commercial Leasing, which will mandate rent relief for eligible tenants hit hard by COVID-19 until at least 13 January 2022.
Under the extension of the Retail and Other Commercial Leases Regulation (COVID-19) 2021, which was due to expire on 20 August, landlords will be required by law to renegotiate rent with their tenants in step with the national cabinet’s mandatory Code of Conduct.
The same regulation previously only required the state’s commercial landlords to attempt mediation before evicting or locking out tenants.
Now, however, landlords will be required to offer rent relief in proportion with a tenant’s decline in turnover, at least half of which must be offered as a waiver, and enter rent renegotiations before moving to evict or lock their tenants out.
Minister for Finance and Small Business Damien Tudehope said the extended support will offer much-needed protection to small businesses like cafés, restaurants, hair salons and gyms for another six months as lockdown restrictions persist.
“We have always encouraged landlords and tenants to come to the table and negotiate, but now we are going one step further by mandating the minimum relief that landlords need to provide impacted tenants,” Mr Tudehope said.
“It has been very tough for small businesses across NSW and we want to deliver more certainty for business owners who have bills continuing to pile up.”
The extended regulation will apply to commercial and retail tenants with a turnover of up to $50 million who meet eligibility criteria for either the COVID-19 micro-business grant, COVID-19 Business Grant or JobSaver Payment.
The mandated rent relief will also be accompanied by a new $40 million Hardship Fund, which will offer monthly grants of up to $3,000 for small commercial or retail landlords who have waived rent of at least the same value, along with any land tax relief they’re eligible for.
Mr Tudehope said that he hoped the monthly grants available to landlords will ease the burden for those who rely on rental income.
“The government has not taken this step lightly, but we saw last year that the framework set down by the national cabinet brought tenants and landlords to the table to work out a way forward,” Mr Tudehope said.
“Now, as part of the feedback from the community, we have ensured small landlords who rely primarily on rental income from commercial properties will also be able to access a monthly $3,000 grant to help ease the burden and ensure they pass on rental relief to tenants.”
According to Mr Tudehope’s office, the NSW government has committed an additional $2 million to the Small Business Commission so it can deal with a surging demand for mediation requests from small businesses.