On 28 May 2020, the much anticipated Retail Shop Leases and Other Commercial Leases (COVID-19 Emergency Response) Regulation 2020 were introduced by the Queensland Government under the COVID-19 Emergency Response Act 2020.
The purpose of the Regulations is to implement the National Cabinet Mandatory Code of Conduct – SME Commercial Leasing Principles during COVID-19 which applies to certain lease arrangements during the period of 29 March 2020 to 30 September 2020.
During this period tenants under an “affected lease” are entitled to the below relief:
- May not be evicted or have their lease terminated for non-payment of rent or outgoings;
- Must have rent reduced in proportion to their lost turnover (at least 50% of the rent reduction offered must be in the form of a waiver, leaving the rest to be deferred);
- May not have their rent increased;
- May not be penalised for reducing trading hours or not opening; and
- May not have a claim made by their landlord on a bank guarantee or security deposit for unpaid rent or outgoings.
A lease will be an “affected lease” where it meets all of the following criteria:
- The lease must be a retail shop lease or a lease for a premises which is used predominantly for carrying on a business;
- The lease must be current as at 28 May 2020 when the Regulations commenced;
- The tenant (or an affiliate) must be eligible for, but not necessarily enrolled in, the JobKeeper Payment Scheme; and
- The tenant must be an “SME entity” meaning the tenant carries on a business in the current year, or is a non-profit body during the current year and its annual turnover for the current year is likely to be less than $50 million and/or its annual turnover for the previous year was less than $50 million.
Provided the tenant satisfies the above criteria they will be entitled to the relief offered under the Regulations and the Code.
Tenants and landlords are encouraged to negotiate reasonably and in good faith to come to an agreement as to the relief the tenant is entitled to and the subsequent variation to the lease or agreement that is in place. Where an agreement cannot be reached, either party may give notice of a lease dispute to the Queensland Small Business Commissioner.
If you are a tenant or landlord and require further advice or assistance in respect of the relief offered under the Regulations and Code, please get in contact with our experienced property team to discuss your matter further. Directors, Luckbir Singh and Melissa Sinopoli will also be answering all your questions in a webinar on 4 June 2020 at 9.30am. RSVP by the following link – https://mailchi.mp/macdonnells/covid19-queensland-legislation-released