The $440 million land tax relief package is expected to be evenly divided between the commercial and retail sector, with landlords to be offered the concession if they pass the savings on to tenants through a rent reduction.
Landlords will be able to apply for a concession of up to 25 per cent of their land tax liability on relevant properties for the calendar year, but it must be passed on to tenants suffering from the economic impacts of COVID-19.
A further land tax deferral for any outstanding amounts for a three-month period will also be offered to landlords who claim the land tax concession.
The new package follows on the mandatory code of conduct announced by Prime Minister Scott Morrison last week which set out rental waivers and deferrals for commercial tenancies.
NSW Treasurer Dominic Perrottet said the new initiatives would facilitate negotiations between landlords and tenants.
“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.
“This is effectively a $220 million commitment in the residential sector from the NSW government to help encourage both landlords and tenants to reach agreement on rent reductions during this difficult time.
“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.”
For commercial landlords, any land tax relief must be passed on to business tenants with a turnover of less than $50 million that experience a 30 per cent or more reduction in revenue as a result of the COVID-19 pandemic.
This will include any business with annual turnover of less than $50 million that is eligible for the Commonwealth’s JobKeeper program.
For residential tenants, household struggling to make rental payments and have suffered a loss of income equal to or greater than 25 per cent due to COVID-19 will need to enter into negotiations with their landlord or managing agent.
Residential landlords will be eligible for a land tax waiver or rebate of up to 25 per cent if they pass the savings on to tenants in financial distress.
Minister for Better Regulation and Innovation Kevin Anderson has also announced an interim 60-day moratorium on finalising existing matters, or making new applications to the NSW Civil and Administrative Tribunal (NCAT) for forced evictions over rent arrears related to COVID-19.
Tenants will be protected from eviction until NCAT is satisfied that negotiations have concluded. Any unpaid rent will accrue as arrears during this period.
“No reasonable person wants to end a tenancy right now, which is why we are supporting renters and landlords to negotiate new temporary terms so tenants keep a roof over their head and landlords aren’t left without rental income for the next six months,” Mr Anderson said.
“I encourage landlords and tenants to approach this new process with an open mind and an empathetic ear. It is important to learn about each other’s current position in order to better support each other during these extraordinary times.”
Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.