As a commercial tenant, you would be well within your rights to ask for extended period of rent reduction, if you continue to suffer from reduced working hours or capacity due to restrictions. Likewise, your landlord could equally refuse your request if they deem it to be too high or if you come across as unreasonable or demanding.
As much as tenants like to demonise landlords sometimes, if you’ve lost 20% of your income but ask for a 50% reduction in rent then your landlord might not be the bad guy in that scenario.
the Australian Prime Minister has said all parties (landlords, tenants and banks) need to work cooperatively towards rental assistance measures. Unfortunately, that advice of ‘sitting down and working it out’ isn’t a guarantee of affordable rent for everyone in a time when not everyone is interested in doing so.
While most people – landlords and tenants – are operating in good faith, there are those who, depending on the side they’re on:
- Will use COVID-19 as an excuse to not pay rent, or pay much less rent than they can afford
- Will use COVID-19 as an excuse to try and squeeze more money out of vulnerable tenants
With so many gyms facing reduced hours for the foreseeable future, plenty of businesses will be unable to pay their full rental amount. But there’s a lot of confusion around what’s acceptable to ask for in terms of a rent reduction – and how to ask for it.
How to ask for a rent reduction
The most important thing to do when asking for a rent reduction is to do so in a calm and respectful way. So, when crafting a letter or email to your landlord, make sure you’re as reasonable as possible, and try to include the following things:
- Details about your financial situation: How much money have you lost, how much has your income decreased by?
- Proof of your financial situation: Include a recent bank statement.
- How much you’re willing to pay in rent (20-50% is generally seen as an acceptable level, but it all depends on your financial situation).
Example rent reduction letters
Here are some example letters from Fair Trading NSW, both from a residential tenant’s perspective and a landlord’s perspective. The tenant in this scenario is a fitness instructor who is out of work due to gym closures around the country and is asking his landlord for a $250 rent reduction per week for two months.
His landlord, in turn, agrees to the request, provided the tenant provides some form of proof as to how much income they have lost.
In this instance, each party was firm yet fair in their communications with each other and clearly laid out their position. This is a good example of how tenant-landlord rent reduction talks should go, and more often than not, this will result in some form of a positive outcome occurring.
Of course, there’s no guarantee this will work, as humans are fickle creatures and there’s always room for one party or the other to be unreasonable.