Amendments to COVID Leasing Regulations – Is this the finish line in sight?
Amendments to the Retail and Other Commercial Leases (COVID-19) Regulation 2022 (Regulation) come into effect from 14 March 2022 and apply to both commercial and retail leases. The important provisions are summarised below.
Impacted Lessee - The definition of Impacted Lessee is being re-defined. The 2-tiered turnover threshold ($50 million between 13 July 2021 - 30 November 2021 and $5 million for the purposes of rent renegotiations after 1 December 2021) is being removed. An impacted lessee is now:
a lessee who qualifies for either the 2021 COVID-19 Micro-business Grant, the 2021 COVID-19 Business Grant, the 2021 Jobsaver Payment or the 2022 Small Business Support Program; and
had a turnover of less than $5 million in the 2020-2021 financial year.
Rent Increases - The prohibition imposed on lessors to not increase rent during the prescribed period has been removed.
Renegotiation of Rent – Where an impacted lessee has failed to pay its rent after 13 March 2022, a lessor may take a prescribed action against the impacted lessee after satisfying the requirement of compulsory mediation. However there is no longer a requirement that the lessor also participate in good faith negotiations before taking that action.
Conclusion of Renegotiation – The renegotiation of rent and other terms of an impacted lease must now be concluded by 30 June 2022. Previously, that process could have been continued after the prescribed period expired.
It is important to highlight that the requirement of compulsory mediation remains unchanged. Accordingly, a lessor must not prior to 30 June 2022 take a prescribed action against an impacted lessee for a prescribed breach such as non-payment of rent unless the lessor has firstly attended mediation.
The combination of the extension of the prescribed period and the retention of compulsory mediation operate to further encourage lessors and lessees to come together, reach an agreement by 30 June 2022 and preserve their commercial relationship.
This could be the final fling for lessees under COVID relief legislation. Unless there is another serious COVID outbreak, it is likely that no protections will exist from 1 July 2022.
If you have any questions, Henry William Lawyers can assist. Feel free to contact our people:
Ron Zucker 0410 590 111
Chelsea Woodward 0404 065 899
