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Retail and Commercial Leasing Amendments in Light of COVID-19

It’s no secret that many businesses are struggling due to the ongoing impact of COVID-19. Thankfully, several State governments have introduced special support measures to ease the pressure on small and medium-sized businesses during these challenging times.

This article summarises existing sources that outline the Retail and Commercial Leasing support measures in both New South Wales and Victoria. You can click on any of the links below to access the full-text version of the articles mentioned.

Please note: this article was complied in late January 2022. As the situation is changing all the time and it is best to do your own research for the most up to date information.

1. NSW Small Business Commissioner – Commercial Leases and COVID-19 FAQS:

In July 2021, the NSW Government enacted the Retail and Other Commercial Leases (COVID-19) Regulation 2021. The Regulation is designed to limit the long-term economic damage of COVID-19 and maximise the number of businesses that can resume normal operation once restrictions are lifted. As part of the Regulation, property owners must negotiate rent relief agreements with eligible tenants experiencing financial distress.

The NSW Small Business Commissioner has compiled answers to a series of commonly asked questions about the support for retail and commercial landlords.

These questions have been broken down into a range of broad categories, which include -

  • An overview of the commercial leasing changes;
  • Eligibility;
  • Disputes and mediation;
  • Property owner questions; and
  • How to start the conversation of rent relief with a property owner or tenant

2. Victorian Small Business Commissioner – Commercial (including retail) tenants and landlords:

The Victoria Government has reintroduced a similar measure, titled the Commercial Tenancy Relief Scheme (the Scheme). Under the Scheme, business owners can apply for a reduction in rent if they have an annual turnover of less than $50 million and have experienced a turnover of more than 30 per cent during the pandemic. The Scheme also places a freeze on rent increases and evictions. The Government recently announced an extension of the Scheme until 15 March 2022.

On this webpage, the Victorian Small Business Commission outlines the Scheme in further detail. It also provides some general information regarding the support available to landlords who are experiencing hardship due to waiving rent.

You can also find a range of additional resources that tenants and landlords are encouraged to access if they have further queries.

3. Clayton Utz - Temporary COVID-19 protections for NSW commercial and retail lessees extended

In this article, Clayton Utz has provided a comprehensive overview of information for lessors and lessees impacted by the NSW Retail and Commercial Leasing Regulations.

On the 13 January 2022, the New South Wales Government introduced the Retail and Other Commercial Leases (COVID-19) Amendment Regulation 2022 (“the 2022 Regulation”). These Amendments reinstate the terms of the original Regulation (as mentioned above) but extend the period during which retail and commercial tenants are protected until 13 March 2022.

In response to its commencement, Clayton Utz has outlined the latest details lessors and lessees need to know when negotiating under the 2022 Regulation.

The key takeaways are as follows –

  • Between now and 13 March 2022, retail and commercial landlords cannot increase rent. Instead, landlords must renegotiate rent and other leasing terms before taking enforcement action against an impacted tenant.
  • The 2022 Regulations apply to both retail and commercial leases, but not leases entered into on or after 26 June 2021
  • To be eligible for relief, a lessee must have a turnover of less than $50 million in the 2020/21 financial year and qualify for either the: -
    • 2021 COVID-19 Micro-business Grant;
    • 2021 COVID-19 Micro-business Grant; or
    • 2021 JobSaver Payment
  • Until 13 March 2022, landlords are advised to –
    • Avoid taking enforcement action against tenants;
    • Refrain entirely from issuing rent increase notices; and
    • Respond to tenants’ request to renegotiate rent within 14 days

 

By Kirra Griffin

kirra griffin headshot

Kirra is a lawyer in training, having recently graduated from a Juris Doctor degree at Melbourne Law School. As our resident legal assistant, Kirra uses her specialised knowledge of the law to translate complex concepts into easily digestible information.

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