The NSW Government has introduced restrictions on landlords seeking to evict tenants due to rental arrears as a result of COVID-19

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The new measures

The new measures include:

an interim 60 day stop on landlords issuing termination notices or applying to the NSW Civil and Administrative Tribunal (the Tribunal) for an eviction order due to rental arrears, where tenants meet the eligibility criteria for being financially disadvantaged by COVID-19. This measure was introduced to allow time for Government financial support to reach those who needed it and limit social movement during the pandemic. The interim 60 day stop ended on 13 June 2020.

a six month restriction on landlords evicting tenants who are financially disadvantaged by COVID-19, unless they have first attempted to negotiate a rent reduction with the tenant.

extended notice periods for certain other lease termination reasons.

allowing tenants financially disadvantaged by COVID-19 to terminate a tenancy agreement where a landlord will not negotiate or where it is necessary to avoid financial hardship

retaining the ability of landlords to terminate a tenancy agreement in cases of undue hardship.

Under the new measures, landlords must negotiate a rent reduction with an impacted tenant in good faith before seeking to terminate a tenancy, and can only give a termination notice or apply for an eviction order if it is fair and reasonable to do so in the circumstances.

Fair Trading is able to assist landlords and tenants to try to reach an agreement.

Landlords can still apply to the Tribunal at any time to take possession of a property if they are suffering undue hardship.

All tenants not impacted by COVID-19 are expected to continue paying all rent and charges in full.

Extended notice periods

Along with these restrictions on evictions for rental arrears, the Government has also extended the notice periods for certain other lease termination reasons to 90 days. This 90 day notice period applies when ending:

a fixed-term agreement

a periodic agreement

a tenancy because of breach of agreement other than for non-payment of rent or charges.

For tenants

If a tenant is impacted by COVID-19 and requires a reduction in rent, they should contact their landlord immediately. A tenant should not wait until they are in arrears to begin negotiations with their landlord.

Eligibility for restrictions on evictions

To be eligible for the six month restrictions on evictions, a household needs to demonstrate they are impacted by COVID-19.

A household is COVID-19 impacted if:

one or more rent-paying members of a household have lost employment or income (or had a reduction in work hours or income) due to the impact of the COVID-19 pandemic, or one or more rent-paying members of a household have had to stop working or reduce work hours due to illness with COVID-19, another member of the household’s illness with COVID-19, or COVID-19 carer responsibilities for household or family members, and the above factors result in a household income (inclusive of any government assistance) reduced by 25% or more.

A tenant can provide simple documents to show that they are impacted by COVID-19, for example:

proof of job termination/stand-down, or loss of work hours

proof of Government income support

proof of prior income.

A household’s circumstances may change over time. For example, a rent-paying member of a household who lost their job may find a new job. This may result in the household no longer meeting the eligibility criteria for being COVID-19 impacted, and the new measures will no longer apply.

Tenants should keep their landlord informed of any changes in their circumstances.

Where a tenant no longer meets the eligibility criteria, the tenant and landlord may wish to renegotiate their rent agreement. For example, they may agree that the tenant will resume paying the usual rent amount.

To understand how the ban on evictions due to COVID-19 may affect your tenancy agreement, see the Flowchart: Can a tenancy be terminated during COVID-19.

Termination of a tenancy agreement by a tenant

A tenant who meets the above eligibility criteria for being impacted by COVID-19 can also apply to the Tribunal to end a tenancy if:

the landlord refuses or fails to participate in a process provided by Fair Trading to negotiate rent reductions, or

the landlord and tenant are unable to agree on a rent reduction and repayment arrangement that would avoid financial hardship for the tenant.

If the Tribunal ends the tenancy, the Tribunal may decide that the tenant should pay compensation of up to two weeks rent to the landlord.

Further information about this process can be found in the Residential Tenancies Act.

For landlords

If a tenant can no longer pay their full rent due to the impact of COVID-19, the landlord and tenant should discuss whether they can agree to a reduced rent or repayment arrangement. Landlords may be able to negotiate reduced repayments or a repayment freeze with their mortgage provider.

During the 60 day stop on evictions, a landlord was not able to issue a termination notice or apply to NCAT for a termination order on the basis rent arrears if a tenant met the criteria for being impacted by COVID-19. The 60 day stop expired on June 13 2020.

From 14 June 2020, a landlord can issue a termination order or apply to the Tribunal for an eviction order only if:

the landlord has first participated in good faith in a rent negotiation process run by Fair Trading and

it's fair and reasonable in the circumstances for a tenancy to be terminated.

In considering an application for an eviction order, the Tribunal may consider:

advice from NSW Fair Trading relating to the landlord and tenant's participation in the formal rent negotiation process overseen by NSW Fair Trading, including whether the landlord or tenant refused, or refused to make, a reasonable offer about rent

whether the tenant has continued to make payments towards the rent

any financial hardship and the financial position of the landlord and tenant

any special vulnerability of the impacted tenant

the public health objectives of ensuring citizens stay at home and that avoidable movement of people is prevented during the COVID-19 pandemic and

any other matter the Tribunal considers relevant.

If you are a landlord and you want to understand how the new measures affect all types of residential tenancy terminations, see the Flowchart for landlords - termination of tenancy options.

Assistance for landlords

Landlords facing financial difficulties are encouraged to:

ask their financial institutions for a temporary mortgage freeze or reduced repayments if their tenants are struggling to pay the rent

check if their insurance covers rental reductions or default

check eligibility for the recently announced land tax reductions

Land tax relief

If you’re a commercial or residential landlord who has reduced your tenants’ rent due to COVID-19, you may be eligible for the NSW Government’s land tax relief.

Landlords are encouraged to apply for land tax relief before 31 October 2020. To find out about eligibility and how to apply, visit Service NSW or Revenue NSW.

For information about commercial leases and COVID-19, see commercial leases FAQs

Termination of tenancy if landlord is in hardship

Landlords may still apply to NSW Civil and Administrative Tribunal at any time to take possession of a property if they are suffering undue hardship.

Situations where the new measures don't apply

Landlords can still use the usual termination processes to end a tenancy in certain circumstances, including:

for non-payment of rent or charges by a tenant who is not impacted by COVID-19

where the landlord is suffering undue hardship

where the tenant has caused serious damage to the property or injury to the landlord or their agent or neighbour

where the tenant is using the premises for illegal purposes

where the tenant has threatened, abused, intimidated or harassed the landlord, the landlord’s agent or another person

where the landlord is selling the premises

where the tenant has not complied with a rectification order issued by NSW Fair Trading.

Guidance for negotiating rent payments

Landlords and tenants should be aware of what they are agreeing to in rent negotiations.

It's important to distinguish between a deferral of part or all of a tenant’s rent payments and a waiver of part of or all of rent payments.

A waiver means the tenant won't be required to pay back an agreed amount of rent.

A deferral means the tenant must pay back an agreed amount of rent in the future.

The amount of rent which is waived or deferred may be some or all of the regular weekly rental cost.

Any agreement reached should specify what amount of rent will be waived or deferred.

If rent is deferred, the agreement should specify when the rent is to be paid back, and how payments will be made to cover the amount (repayment plan).

Good faith negotiations

In general, a good faith negotiation means parties dealing honestly and fairly with one another to genuinely work towards a prompt and mutually beneficial agreement.

Good faith will depend on the circumstances of each case. All parties must act reasonably and be prepared to change their position or make concessions to achieve an agreement.

If a negotiated agreement can’t be reached, both landlord and tenant will need to show they’ve attempted to negotiate in good faith.

For agents

It’s understood agents are required to act in the landlord’s best interests.

However, the COVID-19 situation presents circumstances that mean agents may have to change the way they relate to both parties.

Agents may be required to play more of an intermediary role between tenants and landlords to comply with the new tenancy laws and the government’s relief package.

It’s important to understand the whole economy has changed under COVID-19 and the tenancy market has been significantly affected.

What was in the landlord’s best interests before COVID-19 may not apply now.

Consideration should be given to whether maintaining an existing tenancy with changed terms may be more viable than seeking termination and re-letting the property.

Fair Trading encourages agents to ensure: