COVID tenancy legislation changes and negotiation tips
In order to alleviate some of the financial impacts from COVID-19 restrictions, both the Federal and State Governments have introduced extensive changes to tenancy legislation for residential and commercial properties.
Specific components of each area’s changes are listed below, however the common element is for a moratorium on evictions for a period of six months and the requirement for property owners to negotiate in good faith with tenants affected by the COVID lockdown restrictions to determine rent waivers and deferrals.
At least they tried
As a prelude to providing these guidelines, the Federal Government had negotiated with the banking sector to ensure loan repayments could be ‘hibernated’ or deferred for a set period.
At a high level, this approach would seem like a good solution to the immediate cashflow problem, however the implementation of the approach revealed the real financial load for property owners.
Process guidelines and tips are included in the following links, but if you’re a property owner be mindful of the key items listed here.
* you will be required to negotiate with tenants impacted by the COVID-19 changes – act swiftly to any communications and don’t ignore requests
* you have the right to request evidence of financial impacts but this should be in the form of a letter from an employer / payslip / JobSeeker or JobKeeper enrolment (bank account statements are acceptable for commercial tenants but not for residential tenants)
* be mindful of offering rent reductions without checking on your insurance cover first
* understand the impacts of using the ‘deferment’ option with your loans as the funds may well be capitalised meaning your loan will increase exponentially
* the optimum way to handle the situation will be through a good property manager who should be able to provide good procedures
* ensure you document every agreement and include a check-in option – for example – don’t just agree to a full / set six month ‘rental holiday’ as your tenants’ situation could change (for the better) very quickly.
New South Wales
Australian Capital Territory
New South Wales
Under a new $440 million relief scheme, NSW commercial tenants impacted by COVID-19 will have greater protection from evictions and the opportunity to negotiate reduced rents with landlords. The scheme will be available to businesses that have lost at least 30% of their revenue as a result of the pandemic.
The government has said it will enforce a temporary code of conduct, which will include the following measures:
* landlords must negotiate rent relief agreements, such as reduced rent or rental holidays, with tenants impacted by COVID-19
* a ban on evictions due to non-payment of rent
* a freeze on rent increases.
It also includes land tax discounts for landlords who provide rental relief to their tenants over the next three months. The scheme was voted into action on Friday 24 April 2020. Further details can be found here.
The Queensland Government has committed over $400 million to support landlords and tenants affected by COVID-19.
As part of the relief package, the government will provide a discount of up to 25% on land tax to landlords. Savings must be passed on to tenants in the form of rent relief.
This means if you’re a commercial tenant in Queensland and your landlord is eligible for land tax relief, you can negotiate a rent reduction or rent holiday for up to three months.
Find out more about the Queensland government’s support for landlords and tenants.
The Victorian Government has said it is working towards assistance measures to help landlords and tenants during the COVID-19 pandemic.
Although no legislation has been passed yet, it’s expected there will be a moratorium on evictions for six months for businesses that are struggling to pay rent. Landlords are also encouraged to provide rent relief or holidays to businesses in financial distress.
The Victorian Government has also introduced a $500 million Business Support Fund to support small businesses in hard-hit sectors. Eligible businesses can apply for a one-off $10,000 grant, which can be used towards costs such as rent. Find out more about the Victorian Business Support Fund.
The WA Government is in the process of passing legislation to support commercial and residential tenancies. The state’s Residential Tenancies (COVID-19 Response) Bill 2020 will introduce:
* a moratorium on evictions for six months
* a ban on rent increases during the emergency period
* a provision that any fixed term tenancy agreement due to expire during the pandemic will continue as a periodic agreement
* a provision that a tenant can end a fixed-term tenancy before its end date without incurring break lease fees.
Find out more about support for commercial and residential tenants and landlords in Western Australia.
The Tasmanian Government has introduced the COVID-19 Disease (Emergency Provisions) Act 2020, which includes protection for both commercial and residential tenants.
The Act includes:
* a ban on evictions due to financial hardship as a result of COVID-19
* a reduction of rent by mutual agreement between the landlord and tenant
* a stipulation that tenants are permitted to break their lease due to hardship.
Additionally, the Tasmanian government has introduced various grants to support small businesses impacted by the pandemic. This includes a one-off Small Business Emergency Support Grant of $2,500 available to small businesses in significantly impacted industries. Find out more about the Tasmania Government’s COVID-19 rent relief, grants and loans.
The ACT Government has said it will introduce a scheme that provides relief for business tenants and owner-operated commercial properties. Support levels will be based on need, in line with the following categories:
* Category 1 – businesses that have been partially or not affected
* Category 2 – businesses that have been significantly affected (at least 30% reduction in business income)
* Category 3 – businesses that have been forced to shut down operations due to COVID-19 health restrictions.
Details regarding what support will look like have not yet been clarified, but the ACT Government is urging landlords and tenants to work together to reach an agreement that allows the business to bounce back when the time is right.
Stay up-to-date on commercial tenancy relief in the ACT.
South Australia and the Northern Territory
At the time of writing, the SA and NT Governments are yet to confirm their approach for local commercial tenants and landlords. This page will be updated as further information becomes available.