On the 24 April 2020, the New South Wales Parliament passed the Retail and Other Commercial Leases (COVID-19) Regulation 2020 (Regulation). The objective of the Regulation is to give effect to the National Cabinet Mandatory Code of Conduct – SME Commercial Leasing Principles (National Code of Conduct), which was adopted by the National Cabinet on 7 April 2020.
You can access the Regulation for NSW here
Key points to note in this Regulation:
- Regulation is effective from 24th April 2020 until 25th October 2020
- Lessors are prohibited from taking action against Lessee’s during the period of the Regulation on the grounds of;
- Non-payment of rent or outgoings;
- Non-trade;
Unless a good faith negotiation has occurred.
- Lessors and Lessees are required to renegotiate the rent and other terms within the Lease, having regard to the National Code of Conduct
- Lessee’s must qualify as an “Impacted Lessee” which requires them to qualify for the JobKeeper scheme, and to be able to demonstrate a turnover in the 2018- 2019 financial year of less than $50 million
- The Lessor is prohibited from increasing the rent during the Regulation Period
- Any reduction of outgoings (through reductions in Land Tax, Statutory Charges, Insurance etc) must be passed through to the Lessee
- All other rights and obligations of the Lessor and Lessee remain
While the National Code of Conduct stipulates the good faith leasing principles for the negotiation, there is no legal requirement for these to be implemented. The Regulation requires that the parties have regard for them only.
During this period, you may be approached by parties in the market who are overselling the positive impact that this will have for tenants. TRS remain active in the market and have seen a decrease in rent, and an increase in incentives, and the market will continue to change over the coming months.
Please do not hesitate to contact us. We welcome a confidential discussion with you regarding your Lease and steps to protect you moving forward.