Are you aware of the end to the COVID-19 protections for commercial tenants and landlords?
To keep you informed and up to date, we set out below, important information for you to be aware of going forward.
In order to assist in businesses survival during the pandemic, the WA Government passed a law in April 2020 that enabled mutual agreements between commercial tenants and landlords regarding rental. The 2 laws effected were Commercial Tenancies (COVID -19 Response) Act 2020 (‘CTCR Act’) and WA Code of Conduct.
In the beginning, the law covered from 30 March to 29 September 2020 being the “emergency period” but was then extended to 28 March 2021. Provisional commercial laws resumed also with some changes.
End of Emergency extension period
As mentioned above, the date for resolving a claim for approval of rent relief has been extended to the 28 March 2021. Rent relief applications and dispute resolution applications which relate to the period 30 March 2020 to 28 March 2021 (emergency period), have been extended until 60 days after the end of the emergency period, or 27 May 2021.
Key changes you need to know:
- Any defaults (eg non-payment of rental) that occur AFTER 28 March 2021, the Landlord can take action.
- Rent relief has now ended and the tenant is required to pay full rent when requested by the landlord.
- Any rental that was deferred during the “emergency period” can now start being paid back to the Landlord. The tenant has a minimum of 24 months or the balance of the lease term, whichever is longer, to pay back the deferred rent. If there was an alternate agreement reached, this also comes into effect.
- Tenants are also required to pay back any deferred rent during the “emergency period” even if the lease ended prior to 28 March 2021.
- Any rental increase can also now be applied in accordance with the terms of the lease.
To gain access to the appropriate protections under the CTCR Act or WA code of conduct, you must act now if you are a landlord or tenant who has not yet resolved your commercial tenancy matter.
In order to retain rights under the CTCR Act, your COVID-19 negotiations must be in one of the following stages by 11.59pm on 27 May 2021;
- Be a written variation to your lease; or
- Be an ongoing dispute assisted by the Small Business Commissioner; or
- Be proceeding in the State Administrative Tribunal.
If the tenant is eligible* you should note:
- Even if the tenant has not followed the guidelines** as set out in the WA Code of Conduct, the tenant can still request rent relief for the deferred payments of rent from the landlord in writing for the “emergency period”. The landlord must respond within 14 days.
*Eligible Tenant meaning:
- The business has a turnover of less than $50 million annually;
- The business has experienced a 30% loss in turnover and is eligible for job keeper.
**Summary of guidelines outlined in the WA Code of Conduct:
- You are to make a request in writing for rent relief during the “emergency period”;
- You have provided sufficient and accurate information about your eligibility and the reduction in turnover experienced during the “emergency period”
- You have not yet come to a resolution about rent relief.
To get further advice call our Melbourne commercial law team on 03 9743 1333, our Perth commercial law team on 08 6183 3753 or email .