Legal protections afforded retail tenants under the Retail and Other Commercial Leases (Covid-19) Regulation (No 3) 2020 ended on 28 March 2021. This means the gloves are finally of between landlords and tenants when it comes to lease disputes. Or are they?
Since April 2020 eligible retail tenants have enjoyed the protection of legislation that has required landlords to negotiate in good faith with them rent waivers and deferrals in recognition of Covid-19. Both parties have been required to follow the ‘National Cabinet Mandatory Code of Conduct SME Commercial Leasing Principles During COVID-19’ to deal with the tough conditions.
Landlords were required to:
- Refrain from terminating leases, calling upon bank guarantees or demanding payment of rent arrears;
- Offer eligible tenants reductions in rent in proportion to reductions in turnover in the form of waivers and deferrals;
- Offer tenants an extension of the lease term that is commensurate with the length of the waiver and deferrals offered; and
- Freeze rent increases;
Failing agreement, they were to undergo mediation with the Small Business Commissioner. Only then might the landlord take legal action for certain breaches.
But alas no more.
Some will argue the relaxation of the protections for retail tenants has occurred too early. However one only need look at the retail turnover figures issued by the Australian Bureau of Statistics (“ABS”) to note that retail trade turnover in Australia has increased by 9.1 % since February 2020. The retail economy in Australia is on the up. Despite the end of the Government’s Job Keeper support package and the estimated loss of approximately 100,000 jobs to follow, the RBA predict GDP and employment to return to pre pandemic levels during 2021.
Landlords will be well advised to make haste slowly however when seeking to act upon breaches by eligible tenants. Even though the cut-off date of 28 March 2021 has passed eligible tenants continue to be protected by the Regulations for breaches that occurred prior to that cut-off date. Landlords must continue to be guided by the Regulations and the leasing principles set out in the Code when negotiating outcomes and resolving any dispute. [1]
So maybe the gloves are not off just yet for some.
[1] S 88 of Retail Leases Act (NSW) 1994 The Retail and Other Commercial Leases (COVID-19 Regulation (No 3) 2020 continues to apply, despite the repeal of that regulation, to anything occurring in relation to a lease while the lease was an impacted lease within the meaning of that regulation
