COVID Rent Relief for NSW Commercial and Residential Tenants Reinstated
The Retail and Other Commercial Leases (COVID-19) Amendment Regulation 2021 came into effect on 13 August 2021 and has reintroduced the obligation for landlords and tenants to negotiate rent relief.
- Mandatory negotiation for rent relief between landlords and tenants has been reintroduced
- Tenant’s must be eligible for one of the NSW Government Business grants or JobSaver.
- Tenants must give their lessor a statement to the effect that they are an “impacted lessee”
- Tenants must give their lessor evidence that they are an “impacted lessee”
What are the Amendments?
The Amendment Regulation:
- Reintroduces an obligation for landlords and tenants to negotiate rent relief in good faith within 14 days of receiving the request or another period agreed to by the parties. The negotiations must have regard to the economic impacts of the COVID-19 pandemic and the leasing principles set out in the National Cabinet Mandatory Code of Conduct dated 7 April 2020;
- Extends the prescribed period, which commenced on 13 July 2021, until 13 January 2022;
- Allows for a tenant to make a second or subsequent request for rent relief. However, unless the parties agree otherwise, the request can only be made during the prescribed period and must not relate to rent or outgoings for a period for which rent or outgoings have already been reduced, waived or deferred following a renegotiation under the Amendment; and
- Applies to leases entered into before 26 June 2021.
Further, the rent payable under an impacted lease cannot be increased during the prescribed period, other than rent or a component of rent determined by reference to turnover. A lessor also cannot take prescribed action against an impacted lessee on the grounds of a prescribed breach of the impacted lease that has occurred during the prescribed period unless the matter has been referred for mediation and has failed, and if the lessee has requested a renegotiation, the lessor has complied.
These measures are in addition to the measures already introduced in the Retail and Other Commercial Leases (COVID-19) Regulation 2021 which limit the exercise of certain rights by a landlord in relation to prescribed breaches.
Who is Eligible?
To be eligible for these measures, tenants must give their lessor a statement to the effect that they are an impacted lessee and evidence that they are an impacted lessee. To demonstrate that tenants are an impacted lessee, tenants must demonstrate that they:
- Had an annual turnover of less than
- For franchisees – the relevant turnover is turnover of the business conducted at the premises
- For corporations which are members of a group – the relevant turnover is the turnover of the group
- Turnover of a business includes any turnover derived from internet sales; and
- Are eligible for at least one of the following:
- 2021 NSW Micro-business Grant;
- 2021 NSW Business Grant; or
- 2021 NSW JobSaver Payment.
If you are a tenant or landlord involved in a lease dispute, we can assist you in obtaining a satisfactory and commercial resolution. We are experts in dispute resolution and would be more than happy to provide you with specific advice on the best course of action available.
For further information or for any questions, please do not hesitate to contact us.
Craig Higginbotham and Isobel Bathgate
17 August 2021