On Thursday,the NSW government extended rent negotiation rights to tenants affected by the coronavirus pandemic until March 13. The protections stop landlords from being able to terminate leases when rent isn’t paid and force them to negotiate rent relief for businesses with an annual turnover under $5 million that have seen turnover reduce more than 30 per cent.
Commercial tenants are being given extended protection as Omicron continues to surge.Dominic Lorrimer
Property Council NSW executive director Luke Achterstraat was highly critical of the decision to intervene in commercial contracts when vaccination rates were high and lockdowns were over. While there is no government-imposed lockdown in place,there are some limits on activities and a has emerged in recent spending data.
“This decision should be seen for what it is:government intervention into legal contracts and a compulsory transfer of income from one business to another. Such radical measures are not what ‘living with COVID’ is supposed to be about,” Mr Achterstraat said.
“With international capital more mobile than ever,NSW needs to present a credible environment for business,and government intervention into commercial contracts only undermines that investment proposition.”
He said the code was an administrative burden and there were already negotiations under way with deferred rent often still outstanding.
However,NSW Treasurer Matt Kean said the extension provided much-needed support for commercial tenants struggling during the outbreak.
“Small business is the engine room of our economy and we need to make sure we support impacted businesses through this latest Omicron wave,” Mr Kean said.
“With staff shortages and reduced foot traffic,many businesses are struggling at the moment but the ability to negotiate rent will give them a buffer so they can keep the lights on now and recover more quickly.”
The Small Business Commissioner’s code of conduct says there must be consideration of the landlords’ ability to afford to provide waivers and also requires landlords to pass on reductions in charges such as land tax or council rates and loan deferrals. Land owners have been given extra time to apply for land tax relief.
NSW landlords can also access a Commercial Landlord Hardship Fund providing small and retail property owners the ability to get a monthly grant up to the value of the rental relief they have given tenants.
Mr Achterstraat said the industry had provided $15 billion worth of support to tenants in 2020 and had gone above and beyond code requirements recognising the need to assist struggling commercial renters.
“Property is the only private industry being legislated to support other private industry,with scant regard to the challenges faced by commercial property owners themselves,” he said.
However,the Council of Small Business Organisations of Australia chief executive Alexi Boyd said the decision to extend the protections was helpful and one of many tools required to assist small companies struggling during the outbreak.
“We are happy to see the government extend it,” Ms Boyd said. “The complaint from larger organisations[who are landlords] is it can cost a lot of money. If you don’t bring expensive lawyers to the meeting then it won’t cost you a lot of money ... small businesses bring themselves and their concerns – it’s a mediation process.”
She said a two-month extension was a good start at a time when the outbreak is fast moving and uncertain,and she wanted to see the support rolled out more widely.
“Other states are considering it and we continue to advocate for it,” she said.