The Commercial Landlord Hardship Fund provides grants of up to $3,000 per month per retail or commercial lease to eligible small landlords who may experience hardship as a result of reducing rent for their tenant(s) under the Retail and Other Commercial Leases (COVID-19) Regulation 2021 (the Regulation).
The NSW Government introduced the Hardship Fund to provide support to smaller landlords whose main source of income is impacted by providing rent relief to retail or commercial tenants and those tenants have been financially impacted by the 2021 COVID-19 lockdown.
The Fund will provide grants of up to $3,000 per month per tenancy to small commercial or retail landowners, who will suffer hardship if they waive some or all of the rent of a tenant who is financially impacted by COVID-19 in 2021 and have not claimed any land tax relief for rent reductions provided between 1 July 2021 and 31 December 2021.
The Regulation provides:
(a) a moratorium on lockouts and other prescribed actions for the non-payment of rent, outgoings or the non-compliance of business operating hours specified in the lease for businesses that have experienced a reduction in turnover due to COVID-19, and a freeze on rent increases during the moratorium (commencing 13 July 2021)
(b) government supported mediation to help tenants and landlords renegotiate lease agreements (including rent relief) through waivers and deferrals.
Landlords of impacted tenants must renegotiate rent with eligible tenants in good faith having regard to the leasing principles in the Code of Conduct.
Under the leasing principles, landlords must reduce rent in proportion to the tenant’s decline in turnover. This means if a tenant has experienced a 40 per cent decline in turnover due to COVID-19, then the landlord must provide a 40 per cent reduction in rent.
As a default position, at least 50 per cent of any rent reduction must be in the form of a rent waiver with the remainder a rent deferral. Any deferred rent must be paid back over the balance of the lease term or for a period of no less than 24 months, whichever is greater.
A deferral or delayed rent payment is not rent relief for the purposes of this grant. A rent waiver or non-payment of rent from 13 July 2021 must be agreed.
Total taxable landholdings used to assess eligibility for this grant will be those of the landlord, or the trust in which a property is held. It will also include property held in Self-Managed Superannuation Funds.
The Commercial Landlord Hardship Fund will open for applications in October 2021 and will conclude when determined and notified by the Government.
How the program works
Before applying to the Commercial Landlord Hardship Fund, landlords must complete the following process under the Commercial Tenancy Relief Scheme:
Step 1 – Reach an agreement through either mediation or private negotiation with impacted tenants, that complies with the Retail and Other Commercial Leases (COVID-19) Regulation 2021
Step 2 – Obtain tenant’s approval to disclose terms of agreement for the purpose of applying for the Commercial Landlord Hardship Fund grant
Step 3 – Show evidence that the agreed amount has been applied to the month for which the grant is being claimed
Landlords may then apply for a grant of up to $3,000 per month per eligible property in proportion to their ownership share subject to:
- cessation of the Scheme as publicly announced;
- until all funds from the hardship fund have been exhausted, whichever is sooner
- monthly attestation (for the term of the rental abatement agreement) from the applicant that
- The rental abatement agreement remains in force; and
- All other scheme requirements continue to be met, in particular ongoing financial hardship of both the tenant and landowner.
If a landlord provides a monthly rent waiver of $2,000 and has not claimed land tax relief between 31 July 2021 and 31 December 2021 from the Government, they will be eligible for a $2,000 monthly grant for the property while the Scheme remains open.
A further example:
If a landlord were eligible for land tax relief of $36,000 (based on total taxable land holdings of $3 million), and the actual rental relief provided to the impacted tenant was $18,000 over 4 months, the landlord would be eligible for a monthly commercial hardship support grant of $3,000 per month for 4 months (total of $12,000). So the applicant may decide the land tax relief is a better option based on individual circumstances as they would be able to claim a land tax refund of $18,000 (being equal to the lesser of rental relief or 100% of the land tax).
1. Eligibility criteria
1.1 To be eligible for a grant under the Commercial Landlord Hardship Fund applicants must:
(a) be a landowner or trustee with total taxable land holdings of less than $5 million (as at 31 December 2020, under the Land Tax Management Act 1956), including part holdings but excluding the value of a principal place of residence;
(b) have not claimed land tax relief for the relevant property for rent reductions between 1 July 2021 and 31 December 2021;
(c) have gross rental income as their primary source of income (gross rental income being more than 50% of total assessable income) for the 2019-20 financial year;
(d) be a landowner of the property for which an application is made;
(e) be the landowner of a New South Wales property subject to the Retail and Other Commercial Leases (COVID-19) Regulation 2021;
(f) be a landlord with a current lease agreement that provides rent relief to the tenant(s) from 13 July 2021 that will not be claimed as 2021 land tax relief; and
(g) attest that providing rent relief to the tenant(s) may cause financial hardship
2. How to apply
2.1 Applicants must apply online via the Service NSW website. All questions in the application form must be answered to enable timely assessment and grant payment. The Commercial Landlord Hardship Fund will open for applications in October 2021.
3. Application evidence required
3.1 Applicants must attach a copy of one of the following documents to confirm the property location, land value and income:
(a) a 2020 or 2021 Land Tax Assessment Notice
(b) a 2020-21 Rates Notice
(c) 2019-20 Income tax return for the relevant entity
3.2 Applicants must attach a copy of the current lease agreement (or other suitable documents where not available) with their tenant(s) showing:
(a) the total value of pre-COVID rent
(b) tenant(s) contact details
(c) tenant(s) Australian Business Number(s) or Australian Company Number (ACN).
3.3 Applicants must submit written details of the rent relief agreed between landlord and tenant(s), including:
(a) rent relief start and end dates
(b) total value and per cent of rent deferred
(c) total value and per cent of rent waived.
3.4 Applicants must submit details of one of the following as confirmation of identify:
(a) Driver Licence
(b) Medicare Card
(c) Health Care Card
(d) Pensioner Care Card
(e) Australian Visa; or
(f) Where the applicant is not an Australian entity/citizen/resident documents showing you are the owner and/or authorised representative for the impacted lease.
3.5 Applicants will be required to attest that:
(a) they meet the Commercial Landlord Hardship Fund eligibility criteria;
(b) the information provided in the application is true and correct;
(c) a current lease agreement is in force and is subject to the Regulation;
(d) they hold the written consent of the tenant to provide business and contact details;
(e) the rent reduction has or will result in financial hardship to the applicant; and
(f) they acknowledge and understand the NSW Government reserves the right to recover any grants paid if any application information is found to be false or misleading, or the grant is not used in accordance with the terms of funding set out in these guidelines.
4. Grant amount
4.1 The grant will be equal to the value of the rent waiver provided to the tenant in each month from August 2021, to a maximum of $3,000 per month per eligible tenancy
4.2 Grants will be allocated according to ownership share in the property if there are multiple landowners.
Example: Three part-owners hold equal and separate shares in a property. Each eligible part-owner is entitled to one third of the grant.
5. Terms and use of funds
5.1 The Commercial Landlord Hardship Fund will be open for applications from October 2021 (date TBA) and close at a future date to be announced by the Government.
5.2 Landlords that are individuals or incorporated entities, or hold the property in a trust or a self-managed superannuation fund, are eligible to apply.
5.3 Grant funds must be used by the landlord to offset the rent reduction to their tenant(s).
5.4 Grants funds will only be paid into Australian bank accounts.
5.5 Each part-owner in a property must complete a separate application for the grant.
5.6 Landlords with multiple properties covered by the Commercial Tenancy Relief Scheme must make a separate application for each property.
5.7 Landlords that hold residential property subject to a commercial lease agreement (subject to the lease being covered by the Regulation) are eligible to apply, provided the Commercial Tenancy Relief Scheme eligibility criteria are met.
5.8 Grants are awarded to landlords under the Commercial Landlord Hardship Fund at the sole discretion of the State.
6. Compliance and audit
6.1 Applicants will acknowledge and agree that information and evidence submitted as part of the application will be verified by government agencies such as Service NSW, Department of Customer Service, Revenue NSW and others.
6.2 Any of the following circumstances may be considered when deciding to approve an application:
(a) any adverse findings by a government agency regarding a landlord
(b) a landlord or joint landlord being declared bankrupt
(c) an incorporated entity is placed under external administration
(d) there is a petition to wind up or deregister an incorporated entity
(e) vesting or ending of a trust or self-managed superannuation fund.
6.3 Applicants may be subject to audit by the NSW Government or its representatives for a period of seven years after the grant has been approved. Under audit, applicants will be required to show evidence of hardship, such as income tax assessments.
6.4 The grant will be repayable on demand if any application information is found to be false or misleading, or the grant is not used in accordance with the terms of funding set out in these guidelines.
7. Other information
7.1 The NSW Treasury reserves the right to amend these guidelines and application terms at any time as it deems appropriate at its sole discretion.
7.2 Service NSW is committed to protecting individuals’ personal and private information.
7.3 Service NSW will endeavour to notify all applicants on the outcome of their submitted application within 20 business days.
7.4 Further information may be obtained at the Service NSW website or by calling 13 77 88.
7.5 Applicants can make a complaint or dispute their application outcome by lodging a complaint format the Service NSW website. Service NSW will endeavour to resolve disputes or complaints within 28 days.