The Queensland Government has extended, with some changes, many of the COVID-19 relief measures which were granted to retail and commercial tenants during the "response period" that commenced on 29 March 2020 and ended on 30 September 2020. The extension and changes apply for the three-month “extension period” commencing on 1 October 2020 and ending on 31 December 2020, and are enacted via the Retail Shop Leases and Other Commercial Leases (COVID-19 Emergency Response) Amendment Regulation 2020 (Amendment Regulation).
What has changed during the extension period?
The main changes which have been made are:
- during the extension period, the eligibility requirements have changed so that an “affected lease” 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 Payment scheme for the period between 28 September 2020 and 4 January 2021. This amendment will remove, for the extension period, those tenants that were previously eligible for the Jobkeeper program but who do not meet the eligibility requirements under the new Jobkeeper rules (for example, as a result of the requirement to assess their actual GST turnover on an ongoing basis)
- during the extension period, landlords will not be required to offer any relief in the form of waiver (i.e. rent forever foregone). This is in contrast to the response period, where no less than 50 per cent of negotiated rent reduction was required to be in the form of a waiver. That is, 100 per cent of the rent relief negotiated during the extension period can be provided by the landlord by way of a deferral. The deferred rent for the extension period must be repaid over a period of at least two years commencing the day after the end of the extension period
- the Amendment Regulation introduces a new 15(2A):
“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.”
This regulation appears to allow landlords to have regard to relief which was negotiated prior to the extension period but which included relief for a period of time that falls within the extension period. That is, while the parties are still required to negotiate in good faith during the extension period, it is open for landlords to demonstrate that they have already provided some or all of the required relief for the extension period, where that is the case.
What has not changed?
Broadly speaking, the Amendment Regulation otherwise preserves the relief measures and the parties' obligations for the duration of the extension period. This includes the following:
- the onus remains on both parties to negotiate rent relief reasonably and in good faith. It remains that either party can initiate rent relief negotiations
- landlords cannot take “prescribed action” on the grounds of a tenant's failure to pay rent or outgoings, or to trade, during the extension period. The definition of “prescribed action” is unchanged and includes terminating leases and enforcing guarantees
- landlords must not increase the rent during the extension period. If a landlord would otherwise be entitled to increase the rent, the earliest the increase can take effect is the day after the extension period ends and the increase cannot accrue until that time
- disputes can be referred to the Small Business Commissioner.
Queensland's decision to extend the relief measures to 31 December 2020 aligns with the extension of the equivalent regulations in Victoria and NSW. It remains to be seen whether further extensions in Queensland and other states will be offered.
This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.