New COVID-19 Commercial Leasing Laws

Posted on May 27, 2020 by New COVID-19 Commercial Leasing Laws

During this COVID-19 Pandemic Period one of the key relationships in business that has been impacted is that between commercial landlords and tenants.  Reductions in business turnover has meant tenants have struggled to meet their lease commitments. The Government has implemented two key legislative instruments to operate during these times – the Federal Government via a Mandatory Leasing Code and NSW Government via new Regulations which implement the Code in NSW.


The new laws apply to tenants of commercial premises that are eligible for the Federal Government’s JobKeeper program and have a turnover of $50 million or less.


The laws state that during the COVID-19 pandemic, landlords are not able to terminate leases or draw on security if a tenant fails to pay rent.  Also, landlords are required to reduce rent proportionately to the reduction in the tenant’s turnover, through waivers or deferrals of rent, waivers of rent must account for at least 50% of the total reduction in turnover.  The re-payment of rent deferrals must be amortised over the greater of the balance of the lease term or 24 months.  Plus there will be a freeze on rent increases.


There are many parts to these new laws, beyond the items set out here, so it is important that parties to commercial leases impacted by these laws seek legal advice as to their rights and obligations.


We are assisting many clients navigate and implement these new laws, including where appropriate, offering flat-fee packages for such services, providing very reasonable cost certainty during these difficult times.  If you are a landlord or tenant impacted by these new laws contact us today for assistance.