New COVID-19 Leasing Laws in NSW

16 JUL 2021

 

Current COVID-19 Support Package for Tenants and Landlords

On the 13th of July 2021 the Australian Government announced a new COVID-19 support package which implemented temporary measures to support both tenants and landlords. The support package will not only be financially supporting the parties to a lease but also help reduce community movement and the potential spread of the virus.

Following the announcement of the COVID-19 support package saw the commencement of new legislation - Retail and Other Commercial Leases (COVID-19) Regulation 2021 which takes effect from 13 July 2021. The new legislation aims to support landlords and tenants in conjunction with all mandatory COVID-19 health orders. 

What leases does it apply to?

All new retail and other commercial leases entered before June 26 2021.

60 day freeze on evictions 

Tenants who can’t pay their rent in full because they are impacted by the recent COVID-19 outbreak can't be evicted between now and 20 August 2021.

Prescribed Period

The period from 13 of July extending to 20 August 2021 is now known as the “prescribed period”. The “prescribed period” ensures that under the Retail and Other Commercial Leases (COVID-19) Regulation 2021 “impacted lessees” and their landlords must mediate with the Small Business Commissioner in relation to rent reductions.

The “prescribed period” gives special protection for “impacted lessees” against their landlord. An “impacted lessee” is a tenant who qualifies for the following:

  • New government protection measures. (Micro-business Covid-19 Support Grand and Covid-19 NSW Business Grant); and
  • Had a turnover of less than $50 million in FY 20-21.

A “prescribed breach” refers to an “impacted lessee” not paying rent, outgoings or trading between 13 July 2021 and 20 August 2021. A “prescribed action” is calling upon any security deposit under the Lease or seeking to terminate the Lease.

A landlord can still take a “prescribed action” against a “prescribed breach” during the “prescribe period” however, the parties must commit to a mediation procedure through the Small Business Commissioner as a pre-requisite. 

Benefits for Landlords Committing

The Government has also implemented monetary benefits for those landlords that effectively assist tenants through negotiating its lease terms including land tax relief equal to the value of rent reductions provided by commercial, retail and residential landlords to financially distressed tenants (up to 100 per cent of the 2021 land tax year liability) will be available).

The Government has implemented these measures to ensure that all parties understand the current climax of Covid-19 and can effectively work together to continue a commercial benefit. 

The contents of this publication are for reference purposes only. This publication does not constitute legal advice and should not be relied upon as legal advice. Specific legal advice should always be sought separately before taking any action based on this publication.

 

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