Matthew CranstonEconomics correspondent

Apr 13, 2020 – 12.00am

Landlords of both commercial and residential properties will gain $440 million worth of land tax relief from the NSW government if they assist tenants hit by COVID-19.

The land tax relief is expected to be divided approximately 50-50 with around $220 million going to the commercial sector and a further $220 million expected to benefit the residential sector.

The new initiatives form the NSW government’s response to the mandatory code which the Morrison government announced last week.

In NSW, landlords will now be able to apply for a land tax concession of up to 25 per cent of their 2020 calendar year land tax liability, but the relief landlords pass on to tenants would need to be of the same value or greater.

If the total relief landlords pass on to tenants is greater than 25 per cent of their annual land tax bill then a further land tax deferral for any outstanding amounts will be granted to landlords by the government for a three-month period.

The timing of the NSW government’s response is crucial given that the traditional rent paying time – the first week of the month – has passed, building pressure on both landlords and tenants to negotiate a way to cover rental obligations.

More than a third of businesses have renegotiated their lease and rental arrangements because of COVID-19, according to the latest figures from the Australian Bureau of Statistics. Some landlords have already waived rent for the next three months, worth at least $50,000.

Who is eligible?

The relief to landlords will be passed on to eligible commercial tenants, with turnover less than $50 million and who have experienced a 30 per cent (or more) reduction in revenue as a result of the COVID-19 pandemic.

Eligible residential property tenants include households struggling to make rental payments who have suffered a loss of income equal to or greater than 25 per cent due to COVID-19.

While there has already been a moratorium placed on evictions it should be noted that tenants are now obliged under the mandatory code to enter into negotiations with their landlord or managing agent, prior to seeking a forced end to their tenancy.

Treasurer Dominic Perrottet said the new initiatives would help businesses and households stay afloat and provide greater surety for both tenants and landlords.

“This provides a way forward for tenants and landlords so they can reach an agreement during this difficult period and includes an incentive in the form of a land tax reduction,” Mr Perrottet said.

“I thank the many landlords who are already supporting their tenants through this period and the banks for showing flexibility with deferring loan repayments – we are all in this together and need to work together.”

Mr Perrottet said the land tax relief was “effectively a $220 million commitment in the residential sector from the NSW government” to help encourage both landlords and tenants in reach agreement on rent under the mandatory code.

Measures will be temporary

Minister for Better Regulation and Innovation Kevin Anderson said the government would also enforce an interim 60-day moratorium on finalising existing residential rent matters, or making new applications to the NSW Civil and Administrative Tribunal (NCAT) for forced evictions over rent arrears related to COVID-19.

To facilitate all these significant tax relief changes, as well as deliver increased mediation and advisory services to commercial parties, the NSW Small Business Commission will be given extra staff and an extra $10 million in funding.

Tenants will be protected from eviction until NCAT is satisfied that negotiations have concluded. Any unpaid rent will accrue as arrears during this period.

The measures will be temporary.

NSW Finance and Small Business Minister Damien Tudehope said the rent relief measures were desperately needed among businesses.

“Breathing room on rent is one of the most frequently raised issues by businesses, and we want to ensure we protect retailers and offer landlords an incentive to do so,” Mr Tudehope said.