In brief – on 30 September 2020, the Queensland Government introduced the Retail Shop Leases and Other Commercial Leases (COVID-19 Emergency Response) Amendment Regulation 2020 (Amendment Regulation), effectively extending the window for tenants to seek rent relief
The Amendment Regulation is an extension and amendment to the Retail Shop Leases and Other Commercial Leases (COVID-19 Emergency Response) Regulation 2020 (Regulations) introduced in May this year. The Regulations and the Amendment Regulations are made pursuant to the COVID-19 Emergency Response Act 2020 (Qld) and the Retail Shop Leases Act 1994 (Qld).
What do the amendments mean?
The Amendment Regulation effectively introduces an additional period, the ‘Extension Period’, in respect of which tenants can request rent relief, without a requirement for waiver of rent to be offered by landlords. The Extension Period runs from 1 October 2020 until 31 December 2020 (directly following the initial Response Period which ran from 29 March 2020 to 30 September 2020). The Extension Period does not however, function in the exact same way as the Response Period. We have summarised the key differences below.
The Government has indicated the Amendment Regulations have been introduced to extend the suspension on evictions for commercial leaseholders until the end of 2020. The Attorney-General and Minister for Justice has stated, “it means that to the end of 2020 commercial leaseholders under affected leases can’t have their lease terminated if they fall into arrears as a result of the coronavirus pandemic”.
Key differences of the amendments
There have been minor amendments to the eligibility for tenants to qualify as an 'affected lease'. An 'affected lease' during the Extension Period is a lease where the tenant or an entity connected with, or an affiliate of the tenant who is responsible for or involved in employing staff for the business carried on at the premises, is eligible for the JobKeeper scheme for the period starting on 28 September 2020 and ending on 4 January 2021.
Protections for affected leases and tenants
Section 10 provides protections to any variations of affected leases or any agreements in relation to affected leases that were made before the commencement of the Amendment Regulation.
The Amendment Regulation extends the protections afforded to tenants by extending the prohibition on landlords taking 'prescribed actions' during the Extension Period.
Impact on rent, including increases, waivers, amendments and deferred payments
The prohibition on increases in rent during the response period is extended to include the Extension Period. Further, by way of an amendment to the operation of section 10, this prohibition on increases in rent during the extension period applies despite anything in an affected lease or otherwise in a variation or an agreement relating to an affected lease.
Again, in contrast to the original Regulations, any rent relief offered in the Extension Period does not include an obligation on landlords to offer rent relief in the form of a waiver of rent. Landlords are still obligated to offer rent relief with regard to the circumstances of both parties, but the amendment in Section 15(2)(b) makes it clear that landlords are not obliged to offer rent reduction by way of waived rent in respect of the Extension Period.
The Amendment Regulation introduces section 15(2A) which provides:
Also, to the extent the request relates to the extension period, the offer may include or consist of any rent reduction already offered or given in relation to that period before the commencement of the extension amendment.
It appears the intent of this section is to allow landlords to have regard to offers which have been made prior to the amendment but which relate to the Extension Period. However, the drafting does not resolve whether landlords who have entered into agreements in respect of periods solely relating to or within the Response Period are entitled to rely on those agreements to deny any further request for relief relating to the Extension Period.
Deferred rent in relation to the Response Period will still be payable from the end of the Response Period, being 1 October 2020. Deferred Rent in relation to the Extension Period will be payable from the end of the Extension Period, 1 January 2021.
The onus still remains on both parties to negotiate rent relief reasonably and in good faith.
This is commentary published by Colin Biggers & Paisley for general information purposes only. This should not be relied on as specific advice. You should seek your own legal and other advice for any question, or for any specific situation or proposal, before making any final decision. The content also is subject to change. A person listed may not be admitted as a lawyer in all States and Territories. © Colin Biggers & Paisley, Australia 2020.