Tenants and Landlords of Commercial property could be saved if the State Government waives land tax during the COVID-19 crisis.
The adverse impact of COVID-19 is being felt equally in the commercial and residential property market.
“The financial hardship caused by COVID-19 is adversely affecting both Landlords and Tenants, accordingly - both urgently require assistance. Whether a Tenant can pay their rent or not, outgoings are still payable by the Landlord, despite the crisis,” says Tim McKibbin, REINSW CEO.
“The single biggest impost of income producing property is land tax. Paying land tax, even in good times is difficult, in the current crisis, for many it’s impossible. Let there be no doubt, the Landlord must pay land tax whether it has a Tenant paying rent or not,” says McKibbin.
It is a fallacy that all Commercial Landlords are monstrous and faceless Corporations. Nothing could be further from the truth - the majority are Mum and Dad investors who are heavily reliant on the rental income to pay their expenses. Despite this financial dependency, Landlords are acutely aware of the plight of their Tenants and have reduced the rent, partly on compassionate grounds and partly commercial. Landlords are wanting their tenants to get through this difficulty and emerge with the viable business they had and paying the agreed rent.
Note: The table sets out a typical rent reduction negotiated outcome.
|
Current Rent Per month
|
Rent Reduction
|
New rent per month
|
Outgoings Per month
|
|
$19,356.33
|
80%
|
$3,871.27
|
$9,140.71
|
|
$10,635.68
|
80%
|
$2,127.14
|
$4,683.54
|
|
$9,402.56
|
80%
|
$1,880.51
|
$4,567.61
|
|
$28,030.28
|
80%
|
$5,606.06
|
$9,137.97
|
|
$19,887.59
|
67%
|
$6,630.52
|
$349.82
|
Landlords having to reduce rents to accommodate the financial capacity of Tenants, means that the Landlord’s outgoings are regularly in excess of the rent received.
The Prime Minister has made it clear on numerous occasions that every stakeholder would be expected to carry some of the burden; clearly both the Tenant and Landlord are doing more than their fair share. In all the circumstances it is appropriate that the NSW State Government step forward and waive land tax for the next twelve months.
To demand industry to do its bit while refusing to shoulder any of the load is unconscionable.
Jessica Husband + 61 2 8267 0537 | [email protected]
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About REINSW
The Real Estate Institute of New South Wales (REINSW) is the peak industry body for real estate agents and property professionals in NSW. It represents more than 2000 agencies across residential sales, property management, commercial, strata management, buyers’ agency, agency services and auctioneering. Established in 1910, REINSW works to improve the standards, professionalism and expertise of its members to continually evolve and innovate the industry. It lobbies the government and industry on behalf of members, develops new products and services to benefit agencies and professionals, and offers training and ongoing professional development. For more information, visit reinsw.com.au.