The NSW State Government announced a $440 million in relief for renters and landlords affected by Government-enforced COVID-19 restrictions.
The package is targeted at keeping people in rentals over the next six months.
“This policy is about protection,” NSW treasurer Dominic Perrottet said.
“Protecting tenants from being evicted due to circumstances outside their control. It protects landlords from tenants in circumstances where payment of rent is not being paid when it should be paid.”
The treasurer said the measures are “complementary” to the federal government’s measures.
Half of that money has been allocated to residential tenants who have lost 25 per cent or more of their income, and at the same time residential landlords will be eligible for a land tax waiver or rebate of up to 25 per cent if that saving is passed onto financially distressed tenants. ($220 million for residential and $220 million for commercial.)
“This is effectively a $220 million commitment in the residential sector from the NSW Government to help encourage both landlords and tenants to reach agreement on rent reductions during this difficult time,” Mr Perrottet said.
The Government has ordered a six-month moratorium on new forced evictions if the tenant is in rental arrears because they are suffering financial hardship due to coronavirus.
Under the scheme, a landlord or managing agent must enter into negotiations with a tenant who is struggling to make rental payments.
But, the state treasurer also emphasised it as important that…
“Landlords and tenants continued to honour existing agreements to the extent possible.”
“No reasonable person wants to end a tenancy right now, which is why we are supporting renters and landlords to negotiate new temporary terms, so tenants keep a roof over their head, and landlords aren’t left without rental income for the next six-months,” he explained.
Just to make things clear…this is not a rental holiday – unpaid rent will still accrue as arrears during this period.
And it’s not a “get out of jail” card for tenants, even though some rules have been relaxed.
What does the package mean for residential tenants?
For tenants whose circumstances have not changed, nothing will be different.
However, for residential tenants who have lost 25 per cent of their household income due to coronavirus, they will be eligible to negotiate rent relief options with their landlord.
This 25% loss in household income (inclusive of any government assistance) is after all government support have been included and will be calculated after tax (ie what is shown in the bank statement).
“I would make the point that what is really important here is for landlords and tenants to be sitting down together and negotiating an agreement through this phase,” Perrottet said.
As well as a six-month eviction ban on rent arrears, there will also be a 60-day stop on termination notices by landlords to tenants.
Eligible tenants will be protected from eviction until the Tribunal is satisfied negotiations have concluded, with any unpaid rent to accrue as arrears in that time.
However, tenants will have to repay the rent eventually, as anything unpaid will accrue as arrears during this period.
Perrottet said tenants would not be blacklisted for the accrual of rent relief.
A moratorium on Tribunal hearings
The Minister said that as a sign these new measures were not optional, an interim 60-day moratorium would be in place for new applications to the NSW Civil and Administrative Tribunal for forced evictions over COVID-19-related rent arrears.
Tenants will be protected from eviction until the tribunal is satisfied that negotiations have been finalised.
But they will have to repay the rent eventually, as anything unpaid will accrue as arrears during this period.
The government has flagged action is also being taken “to ensure that evictions for reasons not related to rent arrears are also stayed” – to minimise avoidable housing disruption and movement.
Usual periods of required notice under the Residential Tenancies Act will be increased up to 90 days for terminations due to fixed or periodic leases ending, or other agreement breaches.
Despite this, landlords will still be able to seek the recovery of premises due to their own genuine hardship, while tenants will able to apply to the Tribunal for termination of a fixed-term tenancy on the basis of hardship.
Landlords that have already filed to evict their tenants will have to wait 60 days for their applications to be processed.
When the 60-day moratorium has come to an end, landlords will be able to recover their properties if they are in financial hardship, while tenants will not get a black mark against their names.
However, the first point of call if there is no agreement between a tenant and landlord under this new arrangement is to the NSW Department of Fair Trading’s newly created Dispute Resolution service.
If a landlord refuses to enter into negotiation, the NSW Department of Fair Trading will contact the landlord on behalf of tenant and after collecting all relevant documentation and confirming the 25% drop of income, will seek a mutual agreement.
What does this mean for landlords?
Under the government’s package, residential landlords would be eligible for a land tax waiver or rebate of up to 25 per cent if they pass the savings on to tenants experiencing financial strain.
“The other important point to make is that land tax obligations will also be deferred for the next three months in circumstances where we have a business that is affected by COVID-19 and that will provide an opportunity for landlords to work through these issues with the tenants over this period of time.” Perrottet said.
Landlords will be unable to serve termination notices on their tenants for a 60-day period.
And landlords are also unable to evict tenants for a six-month period, and must engage in negotiation with their tenants.
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