Rent Negotiation Legal Service
We can provide assistance to both Tenants or Landlords. To view our packages click here.
24 March 2022 - Stella Sun
28 February 2022 - Kristie Carlile
16 August 2021 - David Creais & Gabrielle Ellis
Extension of COVID-19 rent relief
On 13 August 2021, the New South Wales Government confirmed that it will re-introduce the National Cabinet’s Mandatory Code of Conduct (Code) to mandatory rent relief negotiations for eligible COVID-19 impacted retail and commercial tenants.
The Government will also extend the operation of the Retail and Other Commercial Leases (COVID-19) Regulation 2021 (Regulation) – which required commercial and retail landlords to attempt mediation before locking out or evicting their tenant – until 13 January 2022.
Whilst the amendments to the Regulation are yet to be released, landlords and tenants can expect the following:
Landlords will be required to renegotiate rent having regard to the Code
Landlords must provide rent relief in proportion with their tenant’s decline in turnover
At least 50% of the rent relief provided by landlords must be in the form of a waiver and the balance a deferral of rent
Tenants will be required to establish their eligibility for the COVID-19 Microbusiness Grant, COVID-19 Business Grant or JobSaver
Land tax concessions offered to landlords which provide rent relief will be extended
Small commercial or retail landlords who provide rental waivers to their tenants may be eligible for a monthly grant of up to $3,000.
These new measures aim to provide landlords and tenants with greater certainty over the coming months.
If you are a landlord or a tenant and you require any assistance with any issues covered by this article, please do not hesitate to contact us, noting we have launched a tailored fixed-fee rent reduction legal service.
11 August 2021 - Irene Horan (updated 8/9/21)
Residential Tenancy Agreements (RTAs) and Covid-19
The Residential Tenancy Support Package applies to eligible tenants who are currently impacted by the NSW Covid-19 lockdown restrictions.
It consists of a 60 day freeze on evictions and it also provides assistance for landlords who agree to reduce the rent under the RTAs.
What’s available for the tenant?
The tenant must satisfy the following 3 conditions in order to be eligible for the current measures:
The tenant must show that the rent paying members of the household have either lost employment, work hours or income due to the Covid restrictions;
The tenant must show that the household’s net weekly income has reduced by at least 25% (compared to the weekly income in the 4 weeks prior to 26 June 2021); and
The tenant must continue to pay at least 25% of the rent which is due under the RTA.
The eligible tenants will be protected from eviction between 14 July 2021 – 11 September 2021 if they fail to meet their rental payments.
This protection applies to all RTAs (including informal and unwritten agreements).
A landlord can still terminate the RTA for other reasons such as illegal use of premises, damage or end of fixed term agreement.
What’s available for the landlord?
A landlord can claim a Residential Tenancy Support Payment where the landlord has agreed to reduce the rent for an impacted tenant from 14 July 2021.
The amount for each landlord will be capped at the rent reduction that is passed onto the tenant, or $3,000 (whichever is the lower). Landlords who have already claimed up to $1,500 can make a further claim for reduced rent up to a total of $3,000.
Landlords can make separate claims for each investment property which they own.
Landlords cannot ask tenants to repay the reduced amount of rent that has been paid to them under the Residential Tenancy Support Payment.
The landlord must satisfy the following in order to be eligible for this payment:
The landlord must show there is a RTA with a tenant;
The tenant must be an eligible Covid-19 impacted tenant; and
The landlord must show that they have entered into a written agreement with the tenant to reduce or waive rent payable from 14 July 2021. A copy of this agreement will be required.
10 May 2021 - Craig Munter and Helen Pham
19 January 2021 - David Creais and Rebecca Renshaw
10 November 2020 - Gabrielle Ellis and David Creais
24 September 2020 - Adam Cutri
On 23 September 2020, the New South Wales Government confirmed that it will extend the operation of the Retail and Other Commercial Leases (COVID-19) Regulation 2020 (Regulation) for eligible COVID-19 impacted retail and commercial tenants to 31 December 2020. This extension is being provided in order to provide tenants with greater certainty over the coming months.
The land tax concession offered to landlords which provide rent relief will also be extended.
Whilst the amendment to the Regulation is yet to be released, landlords and tenants can expect at least the following:
Tenants will be required to re-establish their eligibility under the extension to the Regulation if they wish to request further rent relief;
Landlords will be required to respond to the tenant’s request for further rent relief in a reasonable time frame; and
Landlords that reduce the rent of their tenants between October and December can apply for a land tax concession of up to 25% on the relevant property.
We recommend that impacted tenants and their landlords also take into consideration a reasonable subsequent recovery period after 31 December 2020 when negotiating further relief. This follows the decision in Sneakerboy Retail Pty Ltd v Georges Properties Pty Ltd (No 2)  NSWSC 1141, which also proposed that a reasonable subsequent recover period will likely be 6 months following the end of the Regulations, namely 30 June 2021.
9 July 2020 - David Creais and Kristie Carlile
9 April 2020 - Melissa Potter and Kristie Carlile
3 April 2020 - Melissa Potter, Kristie Carlile and Julia Yassa
2 April 2020 - Melissa Potter, Kristie Carlile and Julia Yassa
31 March 2020 - Craig Munter
Moratorium on Evicting Tenants
The Prime Minister has announced that States and Territories will be implementing a moratorium on the eviction of commercial and residential tenants who are unable to pay their rental as a result of the COVID-19 crisis.
The National Cabinet has agreed on a common set of principals as follows:
A short term, temporary moratorium on eviction for non-payment of rent to be applied across commercial tenancies impacted by severe rental distress due to COVID-19.
Tenants and landlords are encouraged to agree on rent relief or temporary amendments to the lease.
The ability for tenants to terminate leases and / or seek mediation and / or conciliation on the grounds of financial distress.
Commercial property owners should ensure that any benefits received in respect of their properties should also benefit their tenants in proportion to the economic impact caused by COVID-19.
Landlords and tenants not significantly affected by COVID-19 are expected to honour their lease and rental agreements.
Cost sharing or deferral of losses between landlords and tenants, with Commonwealth, State and Territory governments, Local governments and financial institutions to consider mechanisms to provide assistance.
Further details of the moratorium and key principals have not yet been released but it is expected that it will be in place for the next six months.
The Government has stressed that renters, landlords and banks must try and negotiate ways to survive the pandemic.
The Banking Sector to Assist
The financial sector has a key role to play in implementing these proposals. The Australian Banking Association has released a statement confirming that banks propose to help commercial landlords who help tenants through COVID-19 specifically by:
Enabling businesses with total business loan facilities of up to $10 million (up from the $3 million small business threshold) to defer repayments for loans attached to their business for six months; and
Agreeing that during this period, banks will not enforce business loans for non-financial breaches of the loan contract (such as changes in valuations).
These new measures will apply in all sectors of the economy, on an opt-in basis, on condition that:
for commercial property landlords, they provide an undertaking to the bank that for the period of the interest capitalisation, they will not terminate leases or evict current tenants for rent arrears as a result of COVID-19;
the customer has advised that its business is affected by COVID-19;
the customer was current in terms of existing facilities 90 days prior to applying; and
interest is capitalised – meaning either the term of the loan is extended or payments are increased after the deferral period.
The measures are subject to authorisation from the Australian Competition and Consumer Commission and have not yet commenced.
What should Tenant’s Do?
Start discussions with your Landlord as soon as possible.
Let them know the issues you are facing and the impact of COVID-19 on your business.
Present a plan for their consideration supported by financial data.
What should Landlord’s do?
Start discussions with your Tenants as soon as possible.
Consider how lease arrangements, existing incentives, term and options may be able to be restructured to provide some immediate relief.
Contact your bank and find out what assistance is available.
Review existing loan facilities and determine eligibility for the proposed schemes of assistance. What do you need to do to take up these offers?
There are numerous complex issues arising from these proposed changes. We will provide further information once the details of the moratorium have been released.
20 March 2020 - Craig Munter
The COVID-19 crisis is rapidly evolving and its impact on business is likely to be catastrophic.
An interrupted supply chain, depleted work force, inability for some businesses to operate remotely and decline in consumer demand are already affecting many businesses throughout Australia.
The ability to continue to meet commercial contractual obligations is going to become increasingly difficult and this is going to have an impact on both tenants and their landlords.
Failure to pay rent and outgoings on time may give landlords an immediate right to terminate the lease.
Force majeure clauses will need to be reviewed carefully to determine whether or not they can provide relief for tenants, although most clauses would not extend to events such as a pandemic.
If a tenant is prevented from occupying premises due to a forced closure as a result of COVID-19 do they have rights under quiet enjoyment or damage and destruction provisions to seek relief from paying rent whilst they cannot occupy the premises?
Terminating the lease may not be the best option. In such uncertain times, will a landlord be able to find a suitable tenant willing to take on a new lease?
Consideration will need to be made as to whether some payment terms can be entered into to assist tenants during this period of uncertainty.
What impact will all of this have on landlords own obligations with their mortgagees? Vacancies could trigger review rights under existing funding facilities.
What should you do?
We strongly recommend that both landlords and tenants start discussions now to explore what can be done to reduce the impact on their respective businesses.
Some things to consider:
Can incentive arrangements be re-arranged to provide more rent relief up front?
Can security deposits / bank guarantees be drawn down now to make rental payments until such time as business conditions improve?
Perhaps this might be an opportunity for a landlord to take back space that it might have earmarked for other purposes?
There are many challenges ahead and each case will need to be considered in light of its own particular circumstances.
The property team at Bartier Perry have significant experience in commercial leasing and are ready to assist any clients that may need help navigating these difficult times.