COVID-19 is also affecting leases
The Government continues to impose restrictions that hinder businesses from operating to their full potential, and landlords and tenants need to understand their rights and obligations under their lease and the COVID Legislation.
The NSW Government recently announced that the Retail and Other Commercial Leases (COVID-19) Regulation (NSW COVID Regulation) is extended until 31 December 2020. Although other States and Territories have also extended expiry dates, it is necessary for the parties to check the specific expiry dates for the jurisdiction that their commercial or retail premises are located. Please note that this extension does not necessarily mean any prior agreements with the landlord will automatically continue. If the tenant wishes to seek further rent relief, then they must approach the landlord to negotiate and re-establish their right to rent relief for the additional period. If the tenant approaches the landlord for further rent relief, they must respond within a reasonable time.
The eligibility criteria for further relief requires the tenant’s lease to satisfy all of the following points:
• It is a retail shop lease or commercial lease used for carrying on a business.
• It was current and binding on the tenant on 28 May 2020.
• The tenant under the lease is a small and medium enterprise (SME entity) that carried on a business (or non-profit activity) in the current financial year and had a turnover that was:
○ less than $50 million for the 2019–20 financial year, and/or
○ likely to be less than $50 million for the 2020–21 financial year.
• The tenant under the lease is eligible for, but not necessarily enrolled in, the JobKeeper Payment scheme.
If the tenant is eligible for further relief, then the tenant should follow these 5 stages:
1. Ask the landlord to negotiate;
2. Share information to show they are eligible for rent relief, namely that they are entitled to JobKeeper;
3. Either the tenant or the landlord to make an offer to try and resolve the matter (dependent on the State or Territory);
4. Once an offer is made, the other party may accept it or counter offer/negotiate further;
5. Record the agreement. If possible, record the agreement in writing and have it registered on the certificate of title for the land. The reason to have it registered (dependent on the State or Territory) is that if the property is later sold, then the property's purchaser will have notice of the agreement and continue to be bound by such agreement.
If you cannot reach an agreement directly with the landlord, seek specialist legal advice from a lawyer who specialises in leases. They can assist in resolving your matter and obtaining the best possible outcome for your situation and if necessary represent you in mediation.