If you are a commercial or retail tenant that has been impacted by COVID-19, you likely need to know what your options are. While the Federal Government released the National Code of Conduct for Retail and Commercial Leasing and announced a moratorium on evictions, there was still some confusion on how the Code would apply in each state. States and territories have now started to legislate to prescribe how to code will apply. This article will outline what the relevant legislation is in each state and how it applies so you can negotiate lower rent with your landlord.

New South Wales (NSW)

NSW legislation applies to retail or commercial tenants who are “impacted lessees”. This includes businesses that: 

  • qualify for JobKeeper; and
  • whose turnover was less than $50 million for the 2018-2019 financial year.

If you are an impacted lessee, your landlord is prevented from taking a number of actions against you, including:

  • evicting you, re-entering the premises, terminating your lease or using the bank guarantee or security;
  • charging fees or interest on unpaid rent or outgoings; 
  • increasing the rent, except where the rent is based on turnover; or
  • passing on increases in land tax and other statutory charges. 

If you need to negotiate your rent with your landlord, you must enter negotiations in good faith with consideration for the principles of the National Code of Conduct.

Victoria (VIC)

Victorian regulations apply leases held by tenants who are: 

  • classified as small to medium entities; and
  • participating in the JobKeeper scheme.

To be eligible for rent relief under the regulations, you must first request it from the landlord. The request must be in writing and outline:

  1. a statement that your lease is an eligible lease;
  2. proof that you are a small to medium-sized entity; and
  3. proof that you are eligible for and participating in the JobKeeper scheme. 

Even if you are the holder of an eligible lease, you still need to apply for relief. You will only be protected by the regulations and therefore eligible for relief if you have applied.

Once your landlord receives the request, they have 14 days to respond with an offer for rent relief that mirrors principles in the National Code. Once you receive your landlord’s offer, you can: 

  • accept the offer upfront; or
  • enter into negotiations with your landlord in good faith.

Much like NSW, the regulations prevent your landlord from:

  • evicting you, terminating your lease or using your bank guarantee or security; or
  • increasing the rent, except where the rent is based on turnover.

Queensland (QLD)

Queensland has passed regulations that apply to affected leases. Affected leases are leases which retail shop tenants or small business tenants hold (including a licence agreement) that:

  • qualify for Jobkeeper; and 
  • whose turnover was less than $50 million for the 2018-2019 financial year.

If you hold an affected lease, your landlord is prevented from taking a number of actions against you, including:

  • evicting you, re-entering the premises, terminating your lease or using the bank guarantee or security;
  • charging fees or interest on unpaid rent or outgoings; 
  • increasing the rent, except where the rent is based on turnover. 

If you are seeking rent relief from your landlord, you must do so in writing. The landlord has 30 days to provide you an offer for rent relief that mirrors principles in the National Code.

South Australia (SA)

South Australia has passed regulations that apply to tenants suffering financial hardship. You will be considered to be suffering from financial hardship if you are eligible for and receiving JobKeeper payments.

If you are suffering financial hardship, the landlord cannot take a number of actions against you, including:

  • evicting you, re-entering the premises, terminating your lease or using the bank guarantee or security; 
  • charging fees or interest on unpaid rent or outgoings; 
  • increasing the rent, except where the rent is based on turnover; or
  • passing on or requiring reimbursement for land tax.

The legislation does not prescribe how the landlord should provide or negotiate rent relief. You should continue negotiations with your landlord with the principles of the National Code in mind.

Western Australia (WA) 

Western Australia has legislation and regulations that apply to eligible tenants of small commercial leases. Small commercial leases include: 

  • all retail leases under the Commercial Tenancy (Retail Shops) Agreements Act 1985; and
  • leases held by small businesses.

In order to be considered an eligible tenant you must:

  • be eligible for JobKeeper; or 
  • at any time during the pandemic have satisfied the turnover test under the JobKeeper scheme ie. have experienced a 30% reduction in turnover. 

If you are an eligible tenant, the landlord cannot take a number of actions against you, including:

  • evicting you, re-entering the premises, terminating your lease or using your bank guarantee or security;
  • charging fees or interest on unpaid rent or outgoings; or
  • increasing the rent, except where the rent is based on turnover.

If you are seeking rent relief from your landlord you must do so in writing and the landlord is required to provide an offer for rent relief that mirrors principles in the National Code.

Tasmania (TAS)

Tasmania’s regulations apply to businesses who are: 

  • eligible for or become eligible for the JobKeeper scheme; and
  • are a small to medium-sized entity. 

If you are in an eligible business, the landlord is prevented from taking a number of actions against you, including:

  • evicting you, re-entering the premises, terminating your lease or using the bank guarantee or security;
  • charging fees or interest on unpaid rent or outgoings; or
  • increasing the rent, except where the rent is based on turnover. 

The legislation does not prescribe how the landlord should provide rent relief or negotiate it. You should continue negotiations with your landlord with the principles of the National Code in mind.

Australian Capital Territory (ACT) and Northern Territory (NT)

The ACT and NT have only enacted legislation which provides powers to amend legislation and make regulations. 

In NT, the regulations will be made by way of a modification notice. We expect more details to follow shortly.

Key Takeaways

It is important to remember the above prohibitions will not apply to other breaches of the lease. If you breach your lease for a reason unrelated to COVID-19, landlords can take action, and you are still bound by the terms of your lease. In states where the relevant legislation has already been passed, you must follow the principles outlined by your state. In states that have yet to pass legislation, you should follow the National Code of Conduct Principles. If you need assistance negotiating your lease due to COVID-19, get in touch with LegalVision’s COVID-19 legal team on 1300 544 755 or fill out the form on this page. 

 

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