Two new support programs will be available to property investors in NSW.

The NSW government recently announced a land tax relief scheme for residential landowners who provide rental reductions to their tenants.

The scheme follows a similar program which was rolled out in May 2020 and lasted for a year. The program received over 17,200 applications and provided $186m relief to date.

Both schemes also offered tax relief to commercial tenants who provide rent assistance to their tenants.

Minister for Finance and Small Business Damien Tudehope said the land tax relief program is demand driven and there will be no limit to the number of landowners that can receive support from the government.

“We’ve heard from landowners that they would like to help their tenants, but they also have bills to pay,” Mr Tudehope said.

“Providing financial relief will enable them to work with their tenants to offer rent reductions and to alleviate some of the cost-burden during restrictions.”

How can landlords qualify for the land tax relief?

Residential landlords who are applying for the scheme must be leasing property on their parcel of land to a tenant who has lost 25% or more of their household income due to the impacts of the COVID-19 pandemic.

To be eligible, they must have reduced the rent of affected tenants for any period between 1 July 2021 and 31 December 2021 without any requirement for it to be paid back at a later date.

For those who are not qualified for the program, they can instead apply for an extended payment arrangement for their land tax.

How can landlords prove their eligibility?

Aside from the standard requirements, landlords must provide evidence they provided rental reductions to qualify for the scheme.

When applying, landlords must provide any of the following:

  • Copies of tenancy agreements proving rental reduction
  • Rental ledgers
  • Letter from the property manager

If applicable, residential landowners must also submit proof of their tenants' financial distress.

The documents can be in a form of statement from the tenant explaining their current situation, copies of written communication between the landlord and the tenant, and a letter from the property manager.

Landlords, however, must have their tenants' permission to share their information with the tax office.

Landlords can apply for the scheme here.

Eligible landlords can get a land tax reduction from their payable land tax for 2021. The value of the reduction will be the lesser of either the amount of rent reduction they provided to their tenant or 100% of the land tax attributable to the parcel of land leased to that tenant.

The relief will be paid to the landlord as a refund if they have already paid their land tax. It can also be used to offset the balance of the amount of land tax payable.

How can landlords take advantage of the residential tenancy payment?

Minister for Better Regulation and Innovation Kevin Anderson said residential landlords can choose between applying for land tax relief or a payment of up to $3,000 per tenancy if they agree to reduce the rent of their tenants.

“This payment means landlords will be less likely to face missing mortgage repayments,” Mr Anderson said.

“Extra protections for residential tenants mean they won’t have to worry about being evicted at this time due to circumstances outside of their control.”

Landlords who already applied for the tax scheme will not be eligible to get tenancy payments.

The tenancy payments will be available to landlords who have reduced the rent of affected tenants from 14 July 2021.

What do landlords need to provide to be eligible for the payment?

Landlords need to submit the following to receive the tenancy payments:

  • the rental bond number or the written tenancy agreement
  • a written agreement to reduce rent
  • a completed consent from the tenants to share their personal contact details
  • the nominated account for payment

What information should landlords ask their tenants?

For the residential tenancy payment scheme, landlords are required to obtain evidence of financial distress from tenants.

These may include documents such as payslips or bank statements showing reduced income, letter from employer showing job termination or reduced hours, evidence of business closure, medical certificates.

Landlords who qualify for the payments can claim up to $3,000 for each tenancy agreement.

If they have already applied for $1,500 payment, which is the original cap of the program, they will need to lodge a second claim of up to $1,500 and provide another completed Rent Variation agreement.

Landlords can apply for the residential tenancy payment here.