We have previously written about rent relief measures introduced in Queensland under the Retail Shop Leases and Other Commercial Leases (COVID-19 Emergency Response) Regulation 2020 (Regulations).
The Regulations were initially to cover a period until 30 September 2020, but the Queensland Government has since extended the period to cover 1 October 2020 to 31 December 2020 (Extended Period).
Is my business covered by the extension?
The provisions of the Regulations are still targeted at SME tenants, that is, businesses with less than $50 million turnover. The amendments however, introduced a further requirement – a business must be eligible for JobKeeper between 28 September 2020 and 4 January 2021. This means that your business must have a reduction of revenue of at least 30% for the September 2020 quarter to qualify.
Is the landlord obligated to reduce or waive rent?
The Regulations require that landlords and tenants cooperate and act reasonably and in good faith in rent relief negotiations. During negotiations, a landlord is required to consider the circumstances of both their own and that of the tenant, and rent reductions given previously to make a good faith offer of rent reduction.
In other words, the amount of reduction is, subject to the requirement of good faith, based entirely on the discretion of the landlord. This is in contrast with the application of the Regulations pre-October where the reductions in rent is more prescriptive.
Also, the Regulations do not provide for a waiver of rent during the Extended Period. Therefore it is open to a landlord to merely offer a deferment of rent, with deferred rent to be paid within 2 years from 1 October 2020.
What if an agreement cannot be reached about rent relief?
If you and your landlord cannot agree to a relief, either one of you may refer the matter to the Small Business Commissioner for mediation or to QCAT in certain circumstances.
Can the landlord evict my business?
During the Extended Period, a landlord cannot evict your business or recover possession of the premises even if you have failed to pay rent or your business is closed. Apart from that, the landlord will also be prohibited from taking the following actions during the extended period:
- Terminating the lease;
- Requiring your business to pay interest on unpaid rent;
- Enforcing a personal guarantee;
- Enforcing a bank guarantee or making a claim on security bond for unpaid rent or outgoings; and
- Enforcing any other right under the lease.
The landlord can, however, take any of the steps above if genuine attempts have been made by the landlord to renegotiate rent but you or your business either fails to renegotiate and act in accordance with the Regulations. This includes failing to act in good faith and failing to provide sufficient information as required by the Regulations.
Can the landlord increase rent if my business is not eligible for rent relief?
If your business is not covered during the extended period due to ineligibility, the landlord is still not allowed to increase rent until 31 December 2020.
Contact Us For Assistance
If your business is struggling with cashflow, we can help you negotiate a rent reduction with your landlord. We can assist even if your business does not qualify for rent relief during the Extended Period. We find that landlords are generally more receptive to negotiating with tenants when we are on board.
Act now to give your business the best chance of survival. Get in touch with us on 1300 906 966 or send us an email at email@example.com to arrange a free confidential initial discussion.