As part of the New South Wales government’s response to the COVID-19 pandemic, a number of provisions were bought in to assist landlords and tenants in managing those trying times.
However, as of 14 March 2022, the provisions put in place previously to assist landlords and tenants have been scaled back, having significant impacts to those commercial premises who may be struggling to pay rent.
What are the changes?
The introduction of the Retail and Other Commercial Leases (COVID-19) Amendment Regulation 2022 (NSW) saw the following changes:
- Removal of the requirements for parties to an impacted lease to renegotiate rent payable under the lease, or other key terms;
- Removal of the prevention on rent payable under an impacted lease from being increased; and
- The reduction of the definition of an impacted lease to tenants with a turnover of less than $5 million (down from $50 million).
These changes took effect on 14 March 2022, with the only remaining provision of the previous COVID-19 assistance being the requirement for parties to convene and attempt to resolve the dispute by mediation.
The requirement to comply with mediation is currently in effect until 30 June 2022, at which stage that requirement will also cease to have effect (subject to any further extension).
What does this mean?
Previously, landlords and tenants in dispute over an impacted lease had obligations to try and resolve the dispute through mediation. In addition, landlords were prohibited from increasing rent during the period, or refusing to negotiate new terms for the survival of the lease.
With the changes, more power has been given back to landlords to deal with impacted leases, and less protection has been afforded to the tenants. The reduction in the scope of what lease constitutes an impacted lease is consistent with these changes.
However, both landlords and tenants must remember that mediation is still a requirement, and a failure to mediate may have consequences for either party should litigation be commenced.
How can Marsdens help you?
Whether you are a landlord having issues with a tenant, or a tenant who needs advice regarding your current situation, Marsdens can assist to help both landlords and tenants navigate this complex area of law.
If you require advice or have a dispute regarding a commercial lease, please contact Aaran Johnson or Bharath Balasubramanian on (02) 4626 5077 to find out how Marsdens can help you.
The contents of this publication are for reference purposes only. This publication does not constitute legal advice and should not be relied upon as legal advice. Specific legal advice should always be sought separately before taking any action based on this publication.
