Support for Commercial Tenants & Landlords
The NSW Govt has implemented further measures to mandate rent relief for eligible commercial tenants impacted by COVID-19.
Broadly, in order to qualify, tenants must have entered into a lease before 26 June 2021 and be an “Impacted Lessee,” which means they qualify for either the:
- 2021 COVID-19 JobSaver payment; or
- Business Grant; or
- Micro-business grant; and
- Have a turnover in FY2021-21 of less than $50m pa.
The Retail and Other Commercial Leases (COVID-19) Regulation 2021 provides that a landlord must, if requested by the tenant, renegotiate the rent payable with an Impacted Lessee taking into account:
- The economic impacts of the COVID-19 pandemic; and
- The leasing principles set out in the National Code of Conduct of 2020.
The simplest approach for a landlord (or their agent) is to:
i. Ask the tenant to provide a genuine estimate of the reduction in trade as a result of COVID;
ii. If that estimate appears reasonable, agree to a temporary and conditional rent waiver and deferral based on the estimated reduction in trade (50% of the reduction waived and 50% of the reduction deferred).
iii.The temporary and conditional relief be expressly subject to:
a. The tenant providing its September 2021 quarter BAS and December 2021 quarter BAS as soon as possible (and within 7 days of the lodgement date);
b. The final amount of the rent reduction and waiver to be determined by reference to the actual reduction in trade evidenced by the BAS (compared to the same quarter in 2019); and
c.There be a “true up” or an adjustment of the final amount of the rent waived or deferred after determination of the actual reduction in trade.
If the tenant does not agree to this process, and they are in fact an Impacted Lessee, then the landlord must not take any prescribed action (such as eviction, termination, calling on security etc) without first engaging in mediation. Any such mediation should be conducted in good faith and be consistent with the principles set out in the National Code of Conduct of 2020.
If you have any questions or require any assistance with the above, please contact your Lawyer or alternatively, please contact your client manager on (02) 8543 6800 or email them directly.
