The QLD and NSW governments have announced extensions and amendments to the Retail Shop Leases and Other Commercial Leases (COVID-19 Emergency Response) Regulation (QLD) and Retail and Other Commercial Leases (COVID-19) Regulation (NSW). Property and Commercial Lawyer, Andrea McGarry, explains what has changed during the extension period for eligible small and medium-sized businesses.
The COVID-19 Emergency Response Act 2020 (the Act) and the Retail Shop Leases and Other Commercial Leases (COVID-19 Emergency Response) Regulation 2020 (the Regulation) sets out Queensland’s arrangements for small and medium-sized enterprise (SME entity) commercial leases affected by the COVID-19 emergency.
The Queensland Government has made amendments and extended the existing Regulation for a further 3 months, until 31 December 2020.
The Amendments regulate those leases where the tenant is still impacted by COVID-19 and requires rent relief and protections.
With the Amendments, there are heightened eligibility requirements, which means for many the relief may be something they are no longer entitled to.
The key differences that apply during the initial response period (concluding 30 September 2020) and the further extension period (commencing 1 October 2020 and expiring 31 December 2020) include:
- Entitlement to claim relief for the extension period is based on SME tenants showing at least a 30% turnover drop in July/August/September 2020, compared to the same period last year;
- There is no requirement for a landlord’s offer, in relation to the extension period, to include a rent waiver (previously, at least 50% of an offer was to be by way of waiver);
- Offers in relation to the extension period can include any rent reduction already offered or given in the initial response period; and
- 1/24th instalments of agreed deferred rents for the initial response period to 30 September 2020 can start to be collected from 1 October 2020.
Landlords are still unable to take a prescribed action until 1 January 2021. Whilst tenants and landlords can still negotiate on their own terms in good faith, if the lease is caught by the Regulation, they cannot agree to implement rent increases until 1 January 2021.
A prescribed action under a lease, or the starting of a proceeding in a court or tribunal, can include any of the following:
- recovery of possession;
- termination of the lease;
- eviction of the lessee;
- exercising a right of re-entry to premises;
- seizure of any property, including for the purpose of securing payment of rent;
- the payment of interest on, or a fee or charge relating to, unpaid rent or outgoings;
- a claim on a bank guarantee, indemnity or security deposit for unpaid rent or outgoings;
- the performance of an obligation by the lessee or another person under a guarantee under the lease;
- exercising or enforcing another right by the lessor under the lease or other agreement relating to the leased premises.
New South Wales
On 23 September 2020, the NSW government announced that the COVID-19 Regulation will be extended until 31 December 2020. The Regulation was previously set to end on 25 October 2020.
Tenants who were previously afforded rent relief under the Regulation can seek further relief for the period 25 October 2020 to 31 December 2020, however they will be required to re-establish their eligibility.
Landlords will be entitled to receive up to 25 percent land tax concession where they provide additional rent relief to tenants. The land tax concession is in addition to the concession previously provided to landlords who reduced rent between April and September this year.
A bill with further details on the changes is expected in the coming weeks.