Covid and Commercial Leases/Small business fees Updated 17th January 2022

Covid & Commercial Leases

The NSW Government has extended the code of conduct giving rental deferrals and waivers to commercial tenants.

A two-month extension will see the policy continue until March 14th 2022 and preserve the requirement that 50% of any rent relief must be in the form of a rent waiver.

We enclose our previous newsletter thereon which provides more information which is still relevant.

Recent regulations have been legislated that provide protection for certain commercial lessees where related businesses have had a fall in turnover due to lockdowns in New South Wales. The object of this Regulation is to extend those protections as follows—

(a) to extend the prescribed period, which began on 13 July 2021, until 13 January 2022,

(b) to prohibit a lessor increasing rent during the prescribed period if the lessee is an impacted lessee,

(c) to require an impacted lessee to give the lessor evidence that the lessee is an impacted lessee,

(d) to require lessors and impacted lessees to renegotiate rent and other terms of the lease if 1 party requests the renegotiation,

(e) to require a renegotiation to be conducted in good faith with consideration being given to the leasing principles set out in the National Cabinet Mandatory Code of Conduct—SME Commercial Leasing Principles During COVID-19 (the National Principles). The Code of Conduct requires landlords to provide rent relief in proportion with their tenant’s decline in turnover. Of the rent relief provided, at least 50 per cent must be in the form a waiver, and the balance a deferral. Any deferred rent must be paid back over the balance of the lease term or for a period of no less than 24 months, whichever is greater.

(f) to require a lessor to do the following before taking action in relation to certain breaches of the lease occurring during the prescribed period—

(i) to attempt to mediate the dispute with the impacted lessee, and

ii) to engage in a renegotiation if required,

(g) to provide that actions an impacted lessee takes to comply with a law are not breaches of a commercial lease,

(h) to require a court or tribunal to consider the National Principles when considering whether to make certain orders or decisions relating to commercial leases.

An impacted lessee must give the lessor the following information in respect of the impacted lease—

(a) a statement to the effect that the lessee is an impacted lessee,

(b) evidence that the lessee is an impacted lessee.

(2) The information—

(a) may be given before, or as soon as practicable after, a prescribed breach occurs, and

b) must be given within a reasonable time after it is requested by the lessor.

The rent payable under an impacted lease must not be increased during the prescribed period, other than rent or a component of rent determined by reference to turnover.

A lessor must not take prescribed action against an impacted lessee on the grounds of a prescribed breach of the impacted lease that has occurred during the prescribed period unless the matter has been referred for mediation and the Registrar has certified in writing that the mediation has failed to resolve the dispute, and if the lessee has requested a renegotiation, the lessor has complied with that clause.

Small Business Fees and Charged Rebate

The small business fees and charges rebate has increased from $1,500 to $2,000. Eligible businesses can also claim road tolls for business use.

https://www.service.nsw.gov.au/small-business-fees-and-charges-rebate

Important: Clients should not act solely on the basis of the material contained in this newsletter. Items herein are general comments only and do not constitute or convey advice per se. Also changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas. Client Alert is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our prior approval.