As a response to the COVID-19 pandemic, all State governments in Australia were required to enact legislation to govern how leases should be dealt with during COVID-19. The WA government passed the Commercial Tenancies (COVID-19 Response) Act and Regulations and, similarly, the Residential Tenancies (COVID-19 Response) Act and Regulations.
These pieces of legislation came into effect on 30 March 2020 and were originally planned to end on 29 September 2020, but were extended until 28 March 2021.
By way of background to this article, if you would like to know more about the details of the Commercial tenancies COVID-19 legislation, what sort or relief is available and how it can be sought, have a read of our previous article: Rent relief and insolvency relief to continue till 28 March 2020. Will this create a problem for our economy?
For more background, the Department of Mines, Industry Regulation and Safety (“the Department”) has published a factsheet about the commercial tenancies COVID-19 legislation.
Rent relief under the legislation
Put briefly, the types of protection offered under the legislation include:
- moratorium on evictions due to non-payment of rent;
- freeze on rent increases;
- restriction on penalties for tenants who do not trade or reduce their trading hours;
- prohibition on landlords making a claim on any form of security (e.g. a bank guarantee or security deposit) for the performance of the tenant’s obligations under the lease; and
- prohibition on landlords progressing action against a tenant for a breach that occurred after 30 March 2020, but before the start of the new laws.
How to get rent relief
The rent relief provided by the legislation does not apply automatically. The steps that need to be taken for rent relief to apply are described in this flowchart made by the Department.
- The tenant needs to be eligible for rent relief. The eligibility criteria are described in our previous article.
- The tenant needs to make a written request to their landlord for rent relief, with evidence of their eligibility.
- The landlord has 14 days to respond to the tenant’s request and make a written offer of rent relief.
- The tenant and landlord need to negotiate in good faith to agree on things such as:
- Rent relief: whether more than 50% of the rent should be waived;
- Deferred rent: how and when repayment of deferred rent is to occur; and
- Whether there will be an extension of the lease term.
Our previous article also provides an explanation about the waiver and deferral of rent and how that works under the legislation.
- If the parties cannot agree after negotiating between themselves, they can seek dispute resolution via mediation or conciliation with the Small Business Commissioner or the State Administrative Tribunal.
I haven’t negotiated rent relief yet – what should I do?
If rent relief isn’t negotiated, (or resolved by way of a dispute resolution mechanism described above) prior to 28 March 2021, landlords will be able to take steps to enforce their rights under the lease to evict a tenant for failure to pay rent. Given we are already well into March, it is now urgent that you try to negotiate rent relief as soon as possible if you haven’t already.
If you have written to your landlord but they have not responded (and it’s been 14 days) you should urgently contact the Small Business Commissioner or State Administrative Tribunal.
At Lynn & Brown Lawyers, we can provide legal advice and assistance with informal negotiations, mediations and/or State Administrative Tribunal actions. If you are a tenant or landlord of a commercial lease and you have not finalised an adjusted rental agreement yet, we advise you to seek legal advice urgently.
About the authors:
This article has been co-authored by Chelsea McNeill and Steven Brown at Lynn & Brown Lawyers. Chelsea is a Law Graduate from Murdoch University. Steven is a Perth lawyer and director, and has over 20 years’ experience in legal practice and practices in commercial law, dispute resolution and estate planning.