Publications - COVID-19
Further updates on Commercial Leasing
20 August 2021
As COVID-19 (and especially the Delta strain) continues to spread, Governments continue to make changes to legislative schemes to provide for ways to manage some of the negative effects on the community.
One such area is retail and commercial leasing which was the subject of two recent bulletins by us on 18 August 2021 - The latest on Commercial Leasing and The latest in legal developments - Delta Edition. Since then (last Friday), the New South Wales Government announced the reintroduction of the previous retail and commercial leasing code and regulations. Accordingly, we update the position from our two bulletins on 18 August 2021 and note that they should be read in conjunction with this update. At the time of preparing this article only New South Wales and Victoria have enacted their legislative arrangements. No other state has taken any action at the time of publication of this article and their past arrangements of this nature have come to an end, excepting for some mediation facilities.
New South Wales
The new legislation has come into force. To review The Retail and Other Commercial Leases (COVID-19) Amendment Regulation 2021 (NSW) (Amendment) click here.
This extends the existing legislative rent relief scheme from 13 July 2021 to 13 January 2022 and the National Cabinet Mandatory Code of Conduct – SME Commercial Leasing Principles during COVID-19 (Code) comes back into force. The legislative rent relief scheme and the Code together work substantially in the same manner as they did in 2020 with just a few changes to bring it up to date.
The same regime of rent relief (linked to decline in turnover applies). Please refer to our article in April 2020 Retail & Other Commercial Leases - COVD-19 Regulation.
The eligibility for 'Impacted Lessee' has changed, given that JobKeeper no longer exists. To be an ‘impacted lessee’, a tenant must:
- qualify for either of the 2021 COVID-19 Microbusiness Grant, 2021 COVID-19 Business Grant or 2021 JobSaver Payment;
- have a turnover for the 2020/2021 financial year of less than $50 million.
If the tenant is a member of a group, the turnover of the group is the relevant turnover.
Otherwise, the turnover of the business conducted by the tenant is the relevant turnover. Turnover included any turnover
derived from internet sales; and
- have entered into their lease before 26 June 2021.
A commercial rent relief scheme was announced by the Victorian government early this month - Vic - Rent Relief on the Way for Commercial Tenants.
There is information on what the new rent relief scheme will look like as set out below - Vic Government announcement.
- The new legislation, as far as it has been passed is the Commercial Tenancy Relief Scheme Act 2021 (Vic).
- This legislation is in two parts: the enabling Act has been passed, but not the detail which will be in the Regulations. Accordingly, we can only go on the announcements which provide for the following matters:
- There is a prescribed period between the 28 July 2021 to 15 January 2022.
- Rent relief is provided to commercial tenants that have experienced a loss in turnover of more than 30% during the pandemic.
- Rent relief for eligible tenants is calculated by comparing their turnover for the final quarter of the 2020/21 financial year with the turnover from the final quarter of 2018/19.
- Rent relief can be applied retrospectively up to the 28 July 2021, so essentially there is a gap between 28 March 2021 and the 28 July 2021 where tenants cannot obtain relief.
- Anything related to commercial leasing between the 28 March 2021 to 28 July 2021 will need to adhere to the Retail Leases Act 2003 (Vic).
- Landlords can also apply for land tax relief of up to 25% if they are assisting eligible tenants with rent relief.
Where can I find more information?
If you would like help with understanding your rights and obligations as an agent, landlord or tenant, or if you require assistance with any other legal matters, please contact us.
For more of our COVID-19 legal alerts, updates and publications, including the impact of COVID-19 on matters relating to commercial property, please click here. Alternatively call us on +61 2 9233 7299.