The Commercial Landlord Hardship Fund (Fund) provides grants of up to $3,000 per month per property to eligible small landlords who will or have experienced hardship as a result of providing rental relief to their tenant(s) under the Retail and Other Commercial Leases (COVID-19) Regulation 2021 and Schedule 5 of the Conveyancing (General) Regulation 2018 (the Regulations).
Landlords that have claimed land tax relief between 1 July 2021 and 31 December 2021 are ineligible for the Fund.
The NSW Government introduced the Fund to provide support to smaller landlords whose main source of income is impacted by providing rental relief to retail or commercial tenants who have been financially impacted by the 2021 COVID-19 lockdown.
The Regulations provide for:
(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 reductions in rent payable through waivers and deferrals.
Landlords of impacted tenants must renegotiate lease agreements with eligible tenants in good faith, having regard to the principles in the National Code of Conduct for commercial tenancies – leasing principles (Leasing Principles).
Under the Leasing Principles, landlords must reduce rent payable in proportion to the tenant’s decline in turnover. This means if a tenant has experienced a 40% decline in turnover due to COVID-19, then the landlord must provide a 40% reduction in rent.
The Leasing Principles also require at least 50% of any reduction to be in the form of a rental waiver. The remaining portion may be a rental deferral. Rental deferrals must be amortised over the balance of the lease term and for a period of no less than 24 months, whichever is greater, unless otherwise agreed by the parties.
The Fund will open for applications on 17 November 2021 and will conclude on 31 March 2022.
How the program works
Before applying to the Fund, landlords must complete the following process under the Commercial Tenancy Relief Scheme:
Step 1 – Reach a rental abatement agreement to reduce rent payable, through either mediation or private negotiation, with impacted tenants, per the Retail and Other Commercial Leases (COVID-19) Regulation 2021 and Schedule 5 of the Conveyancing (General) Regulation 2018.
Step 2 – Obtain tenant’s approval to disclose terms of the agreement for the purpose of applying for the Fund.
Step 3 – Retain evidence that the agreed reduction in rent has been applied to the month for which the Fund is being claimed.
Landlords may then apply for a payment of up to $3,000 per month (GST inclusive), per property affected by an impacted lease, subject to an 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 have been met, in particular, ongoing financial hardship of both the tenant and landowner.
Grants will then be paid from the Fund, up to the value of any rental relief provided (to a maximum $3,000 per month, GST inclusive, per property affected by an impacted lease), and continue for the term of the rental abatement agreement, until the sooner of:
- the end of the current rental abatement agreement; or
- closure of the Fund as announced by the Government; or
- lapsing of the Retail and Other Commercial Leases (COVID-19) Regulation 2021.
Service NSW will pay a lump sum amount equal to the total monthly value of the current rent waived from 1 August 2021 to 14 November 2021 (Tranche 1).
For any rental waivers provided from 15 November to the end of the Regulations (13 January 2022), a further lump sum payment will be made subject to a separate application in accordance with these guidelines (Tranche 2). It is expected that applications under Tranche 2 will be available from the end of January 2022.
Note: Recent amendments to the Regulations extend rent negotiation rights to impacted tenants with an annual turnover of less than $5 million for the period 1 December 2021 to 13 January 2022.
As an example, where a landholder and tenant agree to a rental reduction of $2,500 per month for the last 3 months, the landlord would be eligible for a lump sum payment of $7,500 ($2,500 rental waiver for 3 months), with one application needed for that agreement, assuming all other scheme requirements have been met. A further lump sum payment would be available after applications open where the rental relief agreement continues, subject to a further application.
Applications for payments under Tranche 1 and 2 will close on 31 March 2022.
1. Eligibility criteria
1.1 To be eligible for a grant under the Fund, applicants must:
(a) in relation to property situated in NSW that is affected by a current impacted lease, for each property:
i. be the landlord;
ii. have entered into an agreement to provide rental relief to tenant(s) from 13 July 2021;
iii. have or will not claim land tax relief between 1 July 2021 and 31 December 2021;
(b) exclude the value of any principal place of residence, have total land holdings the value of which is equal to or less than $5 million (as at 31 December 2020, under the Land Tax Management Act 1956);
(c) have gross rental income as their primary source of income (gross rental income being more than 50% of total gross income) for the 2019–20 or 2020–21 financial year;
(d) attest that providing rent relief to the tenant(s) may cause financial hardship within the meaning of clause 1.2.
(a) are at imminent risk of closure; or
(b) are unable to pay for operating expenses such as rent or employee-related expenses; or
(c) may be forced to reduce employee headcount; and
(d) have not incurred excessive and non-essential business expenses; and
(e) have experienced a decline in revenue due to the impact of NSW public health orders, rather than the result of normal business operations; and
(f) cannot practically rearrange finances or draw upon non-essential assets to continue to operate.
1.3 For the purposes of these guidelines, non-employing business landlords may attest to experiencing financial hardship if they:
(a) are at imminent risk of closure; or
(b) are unable to pay for operating expenses; and
(c) have not incurred excessive and non-essential business expenses; and
(d) have experienced a decline in revenue due to the impact of NSW public health orders, rather than the result of normal business operations; and
(e) cannot practically rearrange finances or draw upon non-essential assets to continue to operate.
1.4 Subject to clause 1.5, for the purpose of these guidelines, landlords who are individuals or that hold property on trust may attest to experiencing financial hardship if they, or in the case of a trust, the beneficiaries:
(a) are unable to maintain for themselves or their immediate families their current standard of living; and
(b) have not incurred excessive and non-essential living expenses.
1.5 Where the beneficiary under clause 1.4:
(a) is an employing business, clauses 1.2 (a) to (f) apply with regards to the beneficiary; and
(b) is a non-employing business, clauses 1.3 (a) to (e) apply with regards to the beneficiary.
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.
3. Application evidence required
3.1 Applicants must attach a copy of the following documents:
(a) A contract for sale of land, or a 2020–21 Rates Notice, or Revenue NSW Client ID and Correspondence ID to demonstrate the property, to which the application relates, is situated in NSW.
(b) 2019–20 or 2020–21 income tax return for the landlord gross rental income as their primary source of income (gross rental income being more than 50% of total gross income) for the 2019–20 or 2020–21 financial year.
(c) A copy of the current impacted lease agreement, or other documentation where the lease agreement is not available (for example, the most recent rental ledgers, bank statements or rent receipts).
3.2 Applicants must also provide:
(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 agreement between the landlord and tenant(s) to provide rental relief, including:
(a) start and end dates
(b) total value and per cent of rent waived, in the form of:
a. copies of tenancy agreements proving rental reduction;
b. rental ledgers; or
c. a letter from your property manager.
Note: You must have your tenants' permission to share their information with Service NSW/Revenue NSW.
3.4 Applicants must submit at least 2 proof of identity documents. They may include, but are not limited to:
(a) Australian driver licence
(b) Medicare card
(c) Australian passport
(d) Australian birth certificate
(e) Australian travel visa
(f) Australian citizenship certificate
(g) Australian certificate of registration by descent
(h) Australian ImmiCard
(i) Australian marriage certificate
(j) Pensioner concession card.
3.5 You may appoint an authorised representative to apply for on your behalf for the Fund. The authorised representative will need to provide:
(a) details of (and proof you have) the authority to act on behalf of the landlord
(b) suitable identity documents per 3.4
(c) attestation that you will be subject to the guidelines of the Fund as if you were the landlord.
3.6 Applicants will be required to attest that:
(a) they meet the 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 landlord; 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 rental relief provided to the tenant in each month from August 2021, to a maximum of $3,000 per month, per eligible property affected by an impacted lease.
5. Terms and use of funds
5.1 The Fund will be open for applications from November 2021 and close at a future date to be announced by the government.
5.2 Landlords that are individuals, incorporated entities, or that hold the property on trust are eligible to apply.
5.3 Grant funds must be used by the landlord to offset the rental relief to their tenant(s).
5.4 Grants funds will only be paid into Australian bank accounts.
5.5 Where a landlord owns multiple properties affected by an impacted lease:
(a) the landlord must lodge a separate application for each property they own. For example, landlord J Smith owns 5 properties that are eligible for a payment from the Fund, J Smith must apply separately for each property; and
(b) for a particular trust, the landlord must lodge one application for each property or properties held on trust for the particular trust. For example, ABC Pty Ltd owns 5 properties that are eligible for a payment from the Fund on trust for the ABC Trust, all 5 properties will require separate applications.
5.6 Landlords that hold residential property subject to a commercial lease agreement (subject to the lease being covered by the Regulations) are eligible to apply, provided the Commercial Tenancy Relief Scheme eligibility criteria are met.
5.7 Grants are awarded to landlords from the 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 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.
6.3 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 process all applications and notify all applicants on the outcome of their submitted application as soon as possible.
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 regarding their application outcome by lodging a complaint form at the Service NSW website. Service NSW will endeavour to resolve disputes or complaints within 28 days.
Authorised representative means a person authorised by a landlord to lodge an application on behalf of the landlord.
Impacted lease has the meaning given in the Regulations.
Landlord means the registered proprietor of a property affected by an impacted lease and the lessor of such lease.
Property means a single folio of the Register registered under the Real Property Act 1900.
Rent deferral means postponing a rent payment until a later date.
Rent waiver means forgoing the right to enforce a rent payment.
Rental relief means the provision of a rent waiver by a landlord in accordance with the Regulation. For the avoidance of doubt, rental relief does not include a rental deferral.
Total land holdings means all land owned by the landlord, as defined in the Land Tax Management Act 1956.