Stamp Duty Concessions and Exemptions NSW

First Home Buyers

The NSW Government has announced stamp duty changes for first home buyers that will apply from 1 August 2020 – 31 July 2021. Please see below:

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Other

There are some other instances where stamp duty is not payable, for example, in the event of a breakup of a marriage where the property is transferred from both parties to the other party. Further, an exemption from duty may apply where a transfer of residential land is between a married couple or de-facto partner ad the property being transferred is the family home.

Risks of a tenant moving into possession of premises without a binding lease

The ruling by the NSW Supreme Court in the case of Darzi Group Pty Ltd v Nolde Pty Ltd  demonstrates the risks of a tenant moving into possession of premises without a binding lease. The involved parties signed a Heads of Agreement (HOA) to lease a commercial premises, the tenant took possession and commenced a fit out of the premises. The tenant expected that the imminent formal lease would reflect the terms of the HOA, however the terms of the lease provided by the landlord varied considerably. Consequently, the parties embarked on 2 years of negotiations through their legal representatives, seemingly resulting in the execution of the lease by the tenant before it being returned to the landlord. Despite the passing of a further 2 years (4 years since moving in), the landlord never executed the lease and continued to attempt to renegotiate terms. The tenant commenced proceedings, seeking to enforce the lease that they had signed. The Court held that the parties did not intend to be bound by the lease as it was reasonable to presume that where parties are acting through legal advice, no binding agreement arises until formal execution and exchange.

Importance of conditions precedent in construction contracts

In the recent case of One Pro Baulkham Hills Pty Ltd v Ming Tian Real Property Pty Ltd [2020] NSWSC 1043, the NSW Supreme Court considered whether conditions precedent to a notice to proceed with construction works had been met. Under the construction contract the contractor was not allowed to commence works until the principal had secured finance, was entitled to draw on the finance and had issued a notice to proceed to the contractor. Ultimately, the Court held that conditions precedent were not satisfied as they were deemed to be “sequential”. This meant that the notice to proceed could not be issued until the preceding conditions had been satisfied. Consequently, as the Principal issued a notice to proceed at a time when the opportunity to draw on finance was not available, the Court held that the notice to proceed was not effective and the contractor was not obliged to carry out works under the contract.

Agent claims commission without a valid agency agreement

In the recent case of Savills (NSW) Pty Ltd v ATF CTH Pty Ltd [2020] NSWSC 956 the Court considered whether an agent could be awarded commission without a valid agency agreement. Savills (the Plaintiff) claimed commission under an “alleged” agency agreement, whereby they were retained by the ATF (the defendant) to sell their property. Savills further alternatively claimed damages for the defendant’s unconscionable conduct in encouraging the plaintiff to do work on the basis of assumption that the plaintiff was the defendant’s exclusive agent for the sale of the property. ATF denied that there was any written agreement with Savills and contended that even if there was a concluded agreement, it did not entitle Savills to payment. ATF also argued that it did not act unconscionably and that the evidence provided by Savills did not prove loss from the alleged unconscionable conduct. The Supreme Court ultimately held that Savills had failed to prove that on the balance of possibilities there was a signed agency agreement. The Court further held that ATF did not engage in unconscionable conduct. This case is a warning to Agents to ensure that they have an executed agency agreement and keep copies of it as evidence.

NCAT dismisses landlords’ application for termination of lease

In the recent case of Tawadros v Grubisic [2020] NSWCATD 1 the NSW Civil and Administrative Tribunal (NCAT) dismissed the application of an early termination order by the landlords, ruling in favour of the tenants. The case involved Mr Tawadros and Ms Roufael (the Landlords) who sought to terminate their residential tenancy agreement with Ms Grubisic and Mr Cardinale (the Tenants) early pursuant to s93 of the Residential Tenancies Act 2010. S93 permits NCAT for making an order for early termination in special circumstances where it is satisfied that the landlord would otherwise suffer undue hardship if the agreement is not terminated. In considering the landlords application, NCAT defined special circumstances as “circumstances that are out of the ordinary” and concluded on the evidence that the Landlords had established special circumstances, as the situation created by COVID-19 can be unusual or uncommon. However, the tribunal was not satisfied that the Landlords would suffer “undue hardship” if the agreement wasn’t terminated as they failed to provide evidence of hardship which was excessive to the circumstances of the case and dismissed the landlord’s application. . This case illustrates the rights of tenants and obligations of landlords during the COVID-19 pandemic.

Court rules on terminating retail lease during COVID-19

In July 2020, the NSWSC handed down a decision in relation to the case of Sneakerboy Retail Pty Ltd Trading as Sneakerboy v Georges Properties Pty Ltd [2020] NSWSC 996. The case involved a tenant (Sneakerboy) who was continuously late paying rent and charges under their lease with the landlord (George Properties). By March 2020, the tenant was in arrears of approximately $65,000. As the effects of COVID-19 were developing the tenant unilaterally sought to alter the previously agreed upon installment plan and began to move stock from the premises. The landlord then claimed that the removal of stock constituted abandonment of the premises. Following an inquiry by the Landlord the tenant asserted that they were not abandoning the premises, but simply ceasing trading for health and safety reasons during the pandemic. By notice in late March 2020, the landlord sought to terminate the lease and enter the premises as a result of the tenant’s failure to pay. Importantly, the landlord terminated the lease prior the announcement of the National Code or before the NSW regulation had been passed. Following termination, the tenant commenced proceedings and sought relief against forfeiture. The Court ruled that the due to the existence of COVID-19, the tenants’ actions could not be considered an abandonment of the premises, and therefore the only grounds for termination was the arrears. The Court further ruled that relief should be given per normal principles that relief is usually given, if the only grounds for termination is arrears, and gave the tenant relief against forfeiture on the conditions that they provided a new bank guarantee and paid the landlord’s cost of proceedings. This case illustrates that arrears alone may not be a valid reason to terminate a lease and proving a tenant has abandoned the premises has an extremely high

Land Tax Discount for Build-to-Rent Projects Across NSW

The NSW Government has announced that it will be introducing a land tax discount for all new build-to-rent projects across the states. It also announced that it will grant build-to-rent developers an exemption from foreign investor surcharges. The Land Tax discount will apply to build-to-rent projects from 1 July 2020 until 2040 and will be equal to a reduction of at least 50% calculated by reference to the unimproved land value. The full eligibility criteria has not yet been released, however, it has been noted that metropolitan developments must consist of a minimum of 50 units. We will keep you updated with developments in relation to this discount over the coming weeks.

NSW Foreign Duty and Land Tax Surcharge – Deadline Extended

As previously discussed in February this year, discretionary trusts that own residential property in NSW or hold an interest in a company or unit trust that owns residential property in NSW, must amend their trust deeds to explicitly exclude foreign persons as beneficiaries, otherwise foreign land tax and duty surcharges would apply. The deadline to make these amendments has been extended from 21 December 2019 to 31 December 2020.  NSW will automatically deem discretionary trusts to be foreign persons unless the trust deed is amended before midnight on 31 December 2020 to:

  • Exclude all foreign persons as eligible beneficiaries
  • Prevent any amendment to the exclusion of foreign persons as beneficiaries, so that the exclusion is permanent.

If you require your trust deed to be review and/or updated, please contact us.

NSW Amendments to COVID-19 Leasing Code Regulations

In a previous article we discussed the NSW governments regulations which gave effect to the National Cabinet Mandatory Code of Conduct – SME Commercial Leasing Principles. The NSW Parliament has now passed further legislation, being the Retail and Other Commercial Lease (COVID-19) Amendment Regulation 2020 (Amendment) which seeks to clarify some of the uncertainties in the initial regulations.  The amendment became effective on 3 July 2020, and has introduced changes to the initial regulations which:

  • Clarify that the obligations to renegotiate rent and other lease terms in good faith before taking prescribed action applies to impacted leases only;
  • Require a lessee to establish that they are an impacted lessee by giving the lessor;
    • A statement to the effect that the lessee is an “impacted lessee”; and
    • Evidence that the lessee is an impacted lessee
  • Clarify that the regulation which deems there to be no breach of a lease due to an act or omission of a lessee required by the law in response to the COVID-19 pandemic applies to “impacted lessees” only.

Introduction of Director Identification Numbers

After much public discussion and consultation, Directors in Australia will now be required to be registered and assigned with a Director Identification Number (DIN). This requirement was created by the Treasury Law Amendment (Registries Modernisation and Other Measures) Act 2020 (CTH) and is expected to have a number of implications in relation to corporate governance. The DIN has been introduced with the aim to increase positive corporate conduct and reduce illegal phoenixing activity.

What are my obligations as a Director?

There are four key obligations for directors under this new scheme. Persons must:

  1. Apply for a DIN prior to being appointed a director or within a prescribed period of being directed to do so by the registrar
  2. Not knowingly apply for multiple DINs
  3. Not deliberately provide false identity information to the registrar; and
  4. Not misrepresent a DIN to a government body or registered body

For persons who are already directors, there will be a 12-month transitional period during which they must apply for a DIN within a period yet to be specified. This regime will automatically commence on 23 June 2022, or such earlier date as proclaimed by the Governor General. Companies and directors should stay up to date on this new regime as there criminal and civil penalties will apply to those found to be in breach of their obligations. B+a will continue to keep you updated in relation to developments of this regime.