NSW Commercial Landlord Hardship Fund

Commercial Landlord Hardship Fund summary and guidelines

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 Commercial Landlord Hardship Fund will open for applications in October 2021 and will conclude when determined and notified by the State Government.

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 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:

  1. 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)
  2. 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% decline in turnover due to COVID-19, then the landlord must provide a 40% reduction in rent. 

As a default position, at least 50% 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

How the program works

Before applying to the Commercial Landlord Hardship Fund, landlords must complete the following process under the Commercial Tenancy Relief Scheme:

  • 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
  • Obtain tenant’s approval to disclose terms of agreement for the purpose of applying for the Commercial Landlord Hardship Fund grant
  • 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; or
  • until all funds from the hardship fund have been exhausted, whichever is sooner, and
  • 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.

Applicants must apply online via the Service NSW website from October 2021. All questions in the application must be answered to enable assessment and grant payment. 

For eligibility criteria, application evidence, terms and use of funds, please consult the Service NSW website.

Allan Hall can provide assistance to our clients as we have done with previous NSW grant programs. Call our team in Brookvale on 02 9981 2300.