5 October 2021
The current Covid-19 pandemic has impacted Tenants and Landlords with the recent changes implemented by the NSW Government on leasing regulations for leases signed before 26 June 2021. The various changes and impacts on Landlords and Tenants can be seen in the Retail and Other Commercial Leases (Covid-19) Regulation 2021.
For what period will these changes be in effect?
Leasing regulations will be impacted from 13 July 2021 to January 2022 (“relevant period”).
What changes have occurred?
There are various requirements which will be discussed below as to how a Tenant will qualify as an ‘Impacted Lessee’. If a Tenant meets the requirements of an Impacted Lessee, the Tenant will be protected with no rental increase during the relevant period and will be entitled to request a commercial tenancy rent reduction, and Landlords will be required to renegotiate a Tenant’s rent and other lease terms (if requested) and will not be able to draw on bank guarantees for rental payment, demand rent be paid, or take any prescribed action against the Tenant (as detailed below)
“Impacted Lessee” Qualification
In order to qualify as an “Impacted Lessee”, a Tenant must:
It is critical for the Tenant to provide the Landlord with evidence of how the Tenant has been impacted and a Statement outlining that the Tenant is an Impacted Lessee.
Landlords are allowed to request evidence from the Tenant on a fortnightly basis showing they remain in an “impacted” status. If the Tenant is no longer impacted, the Tenant or the Landlord will be able to renegotiate the lease.
Obligations of Landlord and Tenants
No Increase in Rent
Rent must not be increased during the relevant period unless it is turnover rent.
No Action Against the Tenant
The Landlord cannot take prescribed action against the Tenant, meaning, the Landlord cannot proceed with any of the following:
Obligation to Mediate
If there is a dispute between the Landlord and an Impacted Tenant, or there has been a breach of one of the prescribed terms of the lease during the relevant period, the parties must attend mediation.
How we can help you
JHK Legal can assist individuals in relation to disputes between landlords and tenants. We also regularly act in matters involving lease breaches.
If you would like any assistance with commercial or retail leasing, or understanding your rights as a Tenant or Landlord, please do not hesitate reach out to the JHK Legal team to obtain advice on your rights, interests and obligations on such a matter.
Written by Katy Sakoulas