COVID-19 Amendment Regulation

WHO SHOULD READ THIS 

Landlords and SME tenants of retail and commercial leases in Queensland.

THINGS YOU NEED TO KNOW

Amendments have been made extending the existing COVID-19 Regulations until 31 December 2020.

There are some differences that apply during the initial response period (concluding 30 September 2020) and the further extension period.

WHAT YOU NEED TO DO

Familiarise yourself with the updated Regulations and the different arrangements for the extension period.

Contact us if you have any questions regarding the Regulations or require assistance understanding the rights and obligations imposed.

Background 

On 29 September 2020, the Queensland Government enacted amendments to the Retail Shop Leases and Other Commercial Leases (COVID-19 Emergency Response) Regulation 2020 (Regulations) to extend the Regulations until 31 December 2020, as well as modifying the application of parts of the Regulations during this ‘extension period’. Background

Find out more about the Regulations generally in our earlier article.

The extension period

The Regulations initially applied during the response period, concluding 30 September 2020.  However, an extension period – 1 October 2020 to 31 December 2020 – has been introduced, with some distinct impacts on affected leases but otherwise generally carrying through the same restrictions and obligations as imposed by the Regulations during the initial response period.

What has changed?

Affected lease threshold in the extension period

For a tenant to request a rent reduction during the extension period, it must be eligible for JobKeeper for the period between 28 September 2020 and 4 January 2021 (i.e. JobKeeper 2.0).  The SME threshold (<$50m annual turnover) remains unchanged.

Rent waivers for the extension period

There is no requirement for a landlord’s offer, in relation to the extension period, to include a rent waiver component (previously, at least 50% of an offer was to be by way of waiver).

Offers in relation to the extension period can include any rent reduction already offered or given in the initial response period.

What has not changed?

Generally, the remainder of the Regulations remain unchanged and now continue to apply during the extension period (i.e. until 31 December 2020), including:

• restrictions on taking a prescribed action in relation to an affected lease (though with some changes as to what may constitute an affected lease during the extension period)
• restrictions on giving effect to rent increases (carried over during the extension period)
• a tenant’s ability to seek a further reduction of rent (but not by way of waiver) where their circumstances have materially adversely changed from those initially considered by the landlord
• obligations in relation to negotiation, provision of information and dispute resolution

Previous agreements reached between the parties during the initial response period remain effective.

What to do?

Landlords

Take note of the extension period and the continuing obligations regarding negotiations and offers, as well as the extended restriction on giving effect to any rent increase or taking a prescribed action.

If a tenant seeks to negotiate in relation to their lease, ensure you are clear as to:

• the period (either the response period or extension period) that is relevant, as this will impact the tenant’s eligibility (as an affected lease) and what needs to be offered (i.e. rent)
• any existing agreements, which generally continue, and how these will be factored into any further offer relating to the extension period

Tenants

Check your eligibility for JobKeeper 2.0, as this will impact whether your lease is an affected lease.

If eligible, you may request your landlord reduce the rent, however landlords are not required to offer waivers for the extension period and so relief will likely be by deferral which requires you to repay that amount over 24-36 months beginning 1 January 2021.

This publication covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. It is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this publication.