NSW Lockdown 2021: New COVID-19 Commercial and Retail Leasing Regulations
You did not just experience déjà vu. There are new regulations that have been introduced by the NSW Government in light of the current lockdown. While the new regulations re-use the same terms you have come to know such as ‘impacted lessee’ and ‘prescribed period’, there are particular differences you need to know and how these regulations may be relevant to you.
The Retail and Other Commercial Leases (Covid-19) Regulation 2021 (NSW) (‘Regulations’) commenced 14 July 2021. The purpose of the Regulations is to provide protection to commercial and retail lessees during the ‘prescribed period’, who qualify as an ‘impacted lessee’. Protection is granted to ‘impacted lessees’ who are in breach of their lease for either non-payment of rent or outgoings and/or failure to trade during core trading hours by preventing the lessor the right to taking an enforcement action against such breach.
The meaning of ‘prescribed action’ remains unchanged from previous iterations of the regulations. That being, the lessor must not take the following actions against an ‘impacted lessee’ during the ‘prescribed period’: evicting the lessee, re-enter the premises, charging interest or fees on late payments, terminating the lease, taking possession or recovering whole or part of a security bond/bank guarantee.
The Regulations do not prevent a lessor taking a ‘prescribed action’ during the ‘prescribed period’ in the circumstances where the lessee:
does not qualify as an ‘impacted lessee’ and is in breach of the lease for any reason;
does qualify as an ‘impacted lessee’ but is in breach of the lease for reasons other than a ‘prescribed breach’;
does qualify as an ‘impacted lessee’ and has committed a ‘prescribed breach’ but the matter has been referred to mediation and the Registrar has certified the mediation failed to resolve; or
entered into the lease after 26 June 2021 (unless that lease was pursuant to an option).
The significant difference between the Regulations and previous COVID-19 leasing regulations is that the Regulations do not require the lessor to grant rent relief such as deferrals or reductions and does not require the lessor to renegotiate the terms of the lease. As such, it appears that any agreement for a concession of the lease terms will be left to the parties to negotiate.
Lessees which are unable to trade during the NSW lockdown will welcome the grants offered by the Government and protection under the Regulations. However, for many lessees, the protection of the Regulations may be too limited. Many lessees will be bearing the cost of repaying rent deferrals granted under the previous COVID-19 leasing regulations in addition to existing rent obligations.
On the other hand, lessors will be relieved for NSW Government’s desire for affected lessees to access the grants on offer while not forcing lessors to provide rent waivers or deferrals under the Regulations.
The NSW Government has also granted lessors relief, with a reduction of up to 100% of their 2021 land tax where lessors have provided impacted lessee’s reduction of rent between 1 July 2021 and 31 December 2021.
Henry William Lawyers can assist with any related enquiries. Feel free to contact our people:
Ron Zucker 0410 590 111
Vincent Tripodina 0408 228 108
Chelsea Woodward 0404 065 899