The announcement comes as the state says residential tenants and landlords who are facing financial hardship due to COVID-19 will also receive increased support and greater certainty from the government.

According to state treasurer Dominic Perrottet, the $440 million in rent relief will be in the form of land tax waivers and rebates.

The expectation is that this will be split “approximately” evenly between business and residential landlords.

Residential rent relief

Residential landlords will be eligible for a land tax waiver or rebate of up to 25 per cent if that saving is passed onto financially distressed tenants, the treasurer explained.

“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,” Mr Perrottet said.

He flagged that it’s important to note that “tenants suffering financial distress as a result of COVID-19 will not be blacklisted for the accrual of rental arrears during this time”.

But the state treasurer also emphasised it as important that “landlords and tenants continued to honour existing agreements to the extent possible”.

“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,” he explained.

Unpaid rent will still accrue as arrears during this period, it was noted.

A stay on evictions

The six-month support package announced alongside the funding allocation includes a moratorium on applications for forced evictions and will require landlords and tenants to enter into negotiations over rental payments in good faith.

The development of such state-based packages has previously been alluded to by Prime Minister Scott Morrison.

The negotiation stage

Where a household is struggling to make payments and has suffered a loss of income either equal to or greater than 25 per cent, there’s a new obligation that the tenant will enter into negotiations with a landlord or managing agent, prior to seeking a forced end to the tenancy.

NSW minister for better regulation and innovation Kevin Anderson said the government wants to send a clear message that the “good faith” negotiation process will not be optional.

An interim 60-day moratorium will be put in place, impacting the finalisation of 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.

“We know many people are worried about meeting their financial commitments at the moment,” Mr Anderson said.

“That is why we need more stability for tenants and landlords while the new Commonwealth income support payments are rolled out and landlords talk to their bank about mortgage relief.”

Noting that some people may find this “a daunting experience”, the state government will also be providing a one-off $2.5 million boost to tenancy advocacy and advice services across the state.

Mr Anderson is encouraging both 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,” he concluded.

As part of the package, tenants and landlord will have access to assistance from Fair Trading and access to the NCAT to resolve matters after the end of the 60-day period, the government outlined.

This will see NSW Fair Trading’s dispute resolution service able to assist where parties are unable to renegotiate and agree on new arrangements.

NCAT will be available to make appropriate orders where parties are unwilling or unable to reach agreement and action has been taken to seek eviction.

Evictions unrelated to arrears

The government has flagged that action is also being taken “to ensure that evictions for reasons not related to rent arrears are also stayed” – to minimise avoidable housing disruption and movement.

Usual periods of required notice under the Residential Tenancies Act will be increased up to 90 days for terminations due to fixed or periodic leases ending, or other agreement breaches.

Despite this, landlords will still be able to seek the recovery of premises due to their own genuine hardship, while tenants will able to apply to the Tribunal for termination of a fixed-term tenancy on the basis of hardship.

More to come.