The NSW Government previously announced extending COVID-19 retail and commercial leasing protections and relief, read our discussion here. Today it did so, see here. In summary:
- the regulation commences 24 October 2020 and extends the ‘prescribed period’ to 31 December 2020
- the regulation operates until 25 April 2021, meaning the prescribed period can easily be extended again
- the current COVID-19 laws are repealed. However, events under those laws continue to operate under this regulation. This is important – it preserves the integrity of agreements already entered and may prevent tenants seeking further relief
- the regulation only applies to leases entered before 24 April 2020, and not to new leases (but ‘new leases’ exclude option leases)
- an ‘impacted lessee’ must still be an SME and qualify for JobKeeper, but the impacted lessee must re-establish eligibility. Turnover also continues to include internet sales
- leases cannot be terminated if tenants do not pay rent or trade during the prescribed period, and rent cannot be increased. Subject to any re-negotiation requests, a landlord can take action after the prescribed period for events during that period
- parties remain free to negotiate agreements, avoiding the prohibitions on evictions, etc. In other words, where relief is given, it likely remains in a landlord’s interest to agree that a breach enables termination
- tenants have limited ability to re-negotiate a second time. Re-negotiation cannot be for periods where relief has already been given. It does not matter if the first re-negotiation happened under the former COVID-19 regulations. This relies on a ‘savings’ provision, and is potentially open to some debate. However, the intention seems apparent
- courts and tribunals remain unable to impose agreements on parties where re-negotiations fail. However, if impacted lessees do not properly participate in negotiations, including demonstrating, if requested, that they are an impacted lessee, landlords can take ‘prescribed actions’, such as terminating or drawing on bank guarantees.
Overall, not too much changes except for the prescribed period now ending on New Year’s Eve (and won’t many of us likewise be happy seeing the back of 2020). Landlords can take some comfort that current agreements remain in place and matters already negotiated, as well as any relief given, do not need to be re-negotiated.
Authors: Bede Haines & Sam Darwish
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this newsletter is accurate at the date it is received or that it will continue to be accurate in the future.