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, 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)

In Queensland, the Minister has general powers to enact regulations allowing for the implementation of the National Code. Queensland has not yet made specific regulations. If you are in Queensland, you should continue to negotiate with your landlord on the basis the principles under the National Leasing Code of Conduct apply.

Queensland has passed a COVID-19 emergency response regulation. This Regulation allows automatic rent relief for certain classes of leases, including commercial leases. However, this appears only to apply to state-owned land.

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 that applies to 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 as defined by the Small Business Development Corporation Act 1983.

Generally, your business is a small business if you: 

  • own your business;
  • run it day to day; and
  • have a relatively small share of the market.

However, this may be clarified or amended if and when regulations pass through parliament.

If you are a small business tenant or a retail shop lease 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.

Any of the above actions that the landlord began before the emergency period are suspended or stayed. 

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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