Frequently asked questions regarding commercial rent relief in NSW
1. What rent relief applies to commercial tenants suffering from the impact of COVID-19?
The Retail and Other Commercial Leases (COVID-19) Regulation 2021 (the Regulation), which commenced 13 July 2021 and ends on 13 January 2022 applies. This reinstates the National Cabinet’s Commercial Leasing Code of Conduct (the Code). The Regulation and the Code are designed to provide protection to both parties and share the burden.
2. Which tenants are entitled to the protection?
In most cases, a lessee qualifies for protection if they obtain one or more of the below:
(i) 2021 COVID-19 Micro-business Grant,
(ii) 2021 COVID-19 Business Grant,
(iii) 2021 JobSaver Payment, and
the following turnover in the 2020–2021 financial year was less than $50 million.
3. What protections apply?
Landlords cannot take certain actions against an eligible tenant unless they have first renegotiated rent and attempted mediation.
Some protection for tenant include:
1. Landlord’s cannot terminate for failure to pay rent.
2. Tenant’s are entitled to a proportionate reduction in rent based on their decline in trade. For example, if the tenant has a 50% decrease in turnover, they could obtain 25% of their rent as waived and 25% as deferred.
3. Deferred rent must be amortised over at least 24 months or the balance of their lease, whichever is greater, starting no earlier than the COVID-19 pandemic ending or the lease expiring.
4. Tenant’s must be allowed to extend their lease for an equivalent period of any rent waiver/deferral period.
5. Rent increases must freeze.
4. How is the turnover decrease determined?
This is determined from the comparison periods the tenant relied on when applying for the grants as a starting point. This would also include income derived from online sales.
5. What evidence is used to determine turnover?
Tenants should provide evidence, including BAS or an accountant’s letter confirming turnover reduction. Receipt of any grants should also be provided as this will form part of the turnover as noted above.
6. How long does this relief continue?
It should provide relief for as long as restrictions impact the tenant. Many landord’s use the base as referred to the grants operating.
7. How long does the landlord have to reply to the tenant’s request for rent relief?
The Regulation requires landlords to respond within 14 days of receiving the request.
8. What can a tenant do if they are threatened with eviction, not provided rent relief, or an agreement is not reached?
Tenants should contact Service NSW or a lawyer specialising in leasing for guidance.
The Small Business Commission’s mediation service can support the parties to resolve disputes.
If mediation is not successful, then the parties may take the matter to the civil courts. Retail lease disputes can be heard in NSW Civil and Administration Tribunal.