COVID-19 commercial leasing laws relaxed

Following amendments to the laws for commercial leasing and in particular Schedule 5 of this law, landlords of commercial premises in New South Wales will, from 14 March 2022, no longer have to renegotiate the rent payable under a lease by a tenant who fits the definition of an “impacted lessee”.

Additionally, rent increases will no longer be forbidden, subject to their legality pursuant to the lease terms.

As reported in earlier articles an ‘impacted lessee’ is a lessee that:

1) qualifies for 1 or more of the following, or would qualify but for a COVID-19 Disaster Payment made to the lessee by the Commonwealth:

• if the lessee is a franchisee – the turnover of the business conducted at the land or the premises;
• if the lessee is a corporation that is a member of a group – the turnover of the group;
• in any other case, the turnover of the business conducted by the lessee.

2) whose turnover in the 2020-21 financial year was less than $5 million in the following circumstances–

• the 2021 COVID-19 Micro-business Grant;
• the 2021 COVID-19 Business Grant,
• the 2021 JobSaver Payment,
• the 2022 Small Business Support Program, and

From 14 March 2022 compulsory mediation is the sole requirement for commercial landlords to follow under legislation enacted as a result of the COVID-19 pandemic. The requirement to renegotiate rent, as well as other requirements incumbent on commercial landlords, no longer apply.

Another notable change is that, from 14 March 2022, the legislation only covers tenants with a turnover of less than $5 million. Prior to 14 March 2022, the legislation covered any tenant with a turnover of less than $50 million during the 2020–21 financial year.

Do you need advice on your commercial lease? Reach out and get in touch with our experienced and friendly commercial team.

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