Article Category - Property and Conveyancing 22 July 2020

After just over two months since it was published, the Retail and Other Commercial Leases (COVID-19) Regulation 2020 is already being amended. The new amendments were published to address some uncertainty and unintended consequences arising from the Regulation, which had been drafted in a hurry. While there are several changes, there is one change that is by far the most important for commercial landlords and tenants.

Under the Regulation (before the changes), a commercial landlord was restricted in taking certain legal action against a tenant for failure to pay rent, if that tenant was an "impacted tenant". An impacted tenant is essentially any tenant that qualifies for JobKeeper.

However, there was no requirement for a tenant to inform the landlord whether or not they were actually an impacted tenant. This was a major flaw in the Regulation, as landlords were left to guess whether their tenants met the eligibility requirements for an impacted tenant. This created a great deal of uncertainty for landlords, who weren't sure whether or not they could take legal action against their tenant for rent arrears.

The new amendments seek to address this issue.

An impacted tenant is now required to give its landlord a statement confirming that they are an impacted tenant, as well as supporting evidence. This evidence will usually be the same kind of evidence used by the tenant for their JobKeeper application.

If the tenant provides the statement and the evidence, then the landlord will not be able to take legal action against them for failure to pay rent, unless and until the parties have re-negotiated the lease. However, if the tenant does not provide the statement or the evidence, then a landlord will have much more confidence in moving forward with legal action.

This still begs the question: at what stage is the tenant required to give the statement and evidence to the landlord, and how long does the landlord have to wait until they are entitled to assume that the tenant is not an impacted tenant because they have not produced a statement or any evidence? Perhaps this will be addressed in the next round of amendments!

In the meantime, if you're a commercial landlord or tenant and require assistance with a leasing matter or with understanding these new changes, please do not hesitate to contact our Property & Commercial team on 1800 650 656. We're here to help!

Aaron Strickland | Solicitor