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NSW extends protections for commercial tenants

Juliet Helmke
16 August 2021 1 minute readShare
NSW extends protections for commercial tenants

Tenants of commercial properties get support under a scheme that requires landlords to negotiate on rent and provides incentives for doling out relief.

The NSW government has announced it will reintroduce the national cabinet’s Mandatory Code of Conduct for Commercial Leasing to mandate rent relief for eligible tenants impacted by COVID-19.

The measure, which was first introduced in April of 2020, imposes a set of good-faith leasing principles on commercial properties to assist tenants struggling to make rental payments due to hardships brought on by the COVID-19 pandemic.

Minister for Finance and Small Business Damien Tudehope said the Retail and Other Commercial Leases (COVID-19) Regulation 2021, which implements the Code of Conduct in NSW, would be in effect until 13 January 2022, providing six months of protection for small businesses.

The regulation expects landlords to abide by the Code of Conduct when negotiating rent with tenants, providing rent relief in proportion with their tenant’s decline in turnover. Of the rent relief provided, at least 50 per cent must be in the form of a waiver, and the balance a deferral. 

The law applies to commercial and retail tenants with a turnover of up to $50 million who qualify for the COVID-19 micro-business grant, COVID-19 Business Grant or JobSaver Payment. It also prohibits a landlord from evicting a tenant for certain breaches of the lease unless they have first renegotiated rent and attempted mediation.

Additionally, NSW will introduce a new $40 million Hardship Fund to provide incentives to landlords making concessions for commercial tenants. A monthly grant of up to $3,000 will be available to small commercial or retail landlords who provide rental waivers of at least the value of the grant and any land tax relief they are eligible for. 

Commercial landowners are also able to apply for up to 100 per cent of their land tax liability for 2021 if they have reduced rent for a tenant by at least the amount being claimed for any period between 1 July 2021 and 31 December 2021. 

“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.” 

To meet the demand for mediations and assist retail and commercial tenants and landlords in their renegotiations, the NSW government has provided the Small Business Commission with an extra $2 million for additional staffing needs.

NSW extends protections for commercial tenants
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Juliet Helmke

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