On 13 August 2021, amendments to Retail and Other Commercial Leases (COVID-19) Regulation 2021 and Conveyancing (General) Regulation 2018 came into effect. These amendments extended and expanded protections for parties to commercial leases impacted by lockdowns.
Most notably, the new expiry date for these protections is 13 January 2022. Along with this extension of the relief period, a number of further protections have been instated for both lessees and lessors. We’ve summarised these below.
Does This Apply to Me?
These regulations apply to commercial leases where the lessee:
- Qualifies for one or more of
- 2021 COVID-19 Micro-business Grant
- 2021 COVID-19 Business Grant
- 2021 JobSaver Payment
- Had less than $50 million (including internet sales) of turnover in the 2020–2021 financial year.
If the lessee satisfies both of these criteria, then they qualify as an ‘impacted lessee’ for the purposes of these regulations and the following applies to you.
Your Obligations as a Lessor
If the lessee is an impacted lessee, then you must not increase their rent until the proscribed period expires.
Also, you must not take action against the impacted lessee for a breach without first going through mediation or renegotiating the lease with the lessee (unless the impacted lessee agrees to the action being taken).
Should any party request to renegotiate the terms of the lease, those negotiations must commence within 14 days of the request (unless both parties agree on an alternative period). All negotiation must be done in good faith, with consideration given to the economic impacts of the pandemic on the parties involved.
Lastly, any actions required by law do not constitute a breach of the lease and may not be used as grounds for action against an impacted lessee.
Your Obligations as an Impacted Lessee
You have to inform the lessor of your impacted status. This includes a statement to the effect that you are impacted and evidence to demonstrate that you qualify under the criteria outlined above.
If the lessor requests this information, you must provide it within a reasonable timeframe. You can also volunteer this information to the lessor at any time before a supposed breach, or as soon as you can afterwards.
Remember that during renegotiations, the requirements of good faith, commencement within 14 days of a request, and consideration of economic impacts also apply to you as the lessee.
Lastly, your lessor may still take action against you on grounds unrelated to the economic impacts of the pandemic.
You can find the current (at time of posting) version of the Retail and Other Commercial Leases (COVID-19) Regulation 2021 on the Legislation NSW website here.
For advice that is more specific to your situation, we would be happy to take your call.