Residential Tenants set up to overcome COVID-19 Pandemic

On 15 April 2020, the NSW Government passed the Residential Tenancies Amendment (COVID19) Regulation 2020 (the Regulations). The Regulations aim to provide relief to residential tenants impacted by COVID-19 for the next six months.

The Regulations affect tenants and landlords of leases governed by the Residential Tenancies Act 2010 (NSW) (the Act). Parties to residential leases should familiarise themselves with these changes.

Importantly, the Regulations introduce a moratorium on landlords issuing a notice of termination to tenants affected by Covid-19, for non-payment of rent or charges.

This moratorium applies only to an “impacted tenant”, defined in the Regulations as a member of a household impacted by Covid-19. A household is impacted by Covid-19 if the working circumstances of a rent-paying household member change, in one of the proscribed ways, such that the weekly household income has been reduced by at least 25%.

A landlord may still issue a notice of termination for non-payment of rent or charges if the following requirements are satisfied:

1. The landlord gives the notice after 14 June 2020, being 60 days from the Regulations commencing;

2. The landlord has participated in a formal rent negotiation process with the tenant, in good faith; and

3. It is fair and reasonable in the circumstances for the landlord to issue the notice.

The same requirements are proscribed with respect to a landlord applying for an order from the NSW Civil and Administrative Tribunal. It is expected that the purpose of the 60-day prohibition is to allow the parties to negotiate in good faith, allow a tenant to utilise government income assistance programs, and for the landlord to negotiate with its lenders.

The Regulations also enact a 90-day notice period for notices of termination issued under sections 84, 85, 87 and 94 of the Act. This moratorium is not limited to an “impacted tenant”.

Relief for Landlords

On 13 April 2020, the NSW Treasurer announced a Government support package, in the amount of $220 million, for residential landlords. The package proposes land tax liability rebates of up to 25%.

In line with the Regulations, to be eligible, residential landlords will need to demonstrate they are leasing property to an “impacted tenant” being a household with the relevant 25% income reduction. The landlord will also need to demonstrate the land tax relief will be passed onto the tenant in rent reduction.

Revenue NSW also announced extended deadlines for land tax payments, allowing tax to be paid in instalments, and applying leniency for late payment. No refunds are available for payments already made.

While the specifics of this package will not be determined until legislation is passed, it is promising that the Government is directing relief to landlords in these difficult circumstances.