NSW extends commercial rent relief for SMEs to help them recover during this holiday season
The NSW Government extended the rent relief provisions for eligible businesses with a turnover of less than $5 million until 13 January 2022, under the Retail and Other Commercial Leases (COVID-19) Regulation 2021.
If your business is unable to meet lease commitments due to the current COVID-19 public health orders, you may be eligible for protection.
Under the Regulation, retail and commercial property owners must renegotiate rent with eligible tenants in good faith having regard to the leasing principles in the Code of Conduct and the economic impact of the COVID-19 pandemic.
Overview of commercial leasing changes
On 14 July 2021, the NSW Government enacted the Retail and Other Commercial Leases (COVID-19) Regulation 2021 (the Regulation). Amendments passed on 13 August 2021 provide even greater protections to impacted tenants by reinstating National Cabinet’s Commercial Leasing Code of Conduct.
Amendments on 1 December 2021 extend rent negotiation rights to impacted tenants with an annual turnover less than $5 million for the period 1 December 2021 – 13 January 2022.
The Regulation ensures that the economic impact of COVID-19 is shared by property owners and tenants. The protections in the Regulation, combined with the land tax concessions and the newly established Commercial Landlord Hardship Fund, will help limit the long-term economic damage of COVID-19 and maximise the number of businesses that can resume normal operation when public health orders are lifted.
What actions has the Government taken on commercial leases?
Under the Regulation, property owners must negotiate rent relief agreements with eligible tenants in financial distress due to the COVID-19 public health orders.
In negotiating these agreements, property owners and tenants must have regard to the leasing principles in the Code of Conduct, and the economic impacts of COVID-19.
Under those principles, property owners are required to offer tenants rent relief proportionate to the tenant’s decline in turnover. Waivers should make up at least 50 per cent of any rent relief provided. Rental deferrals make up the balance.
If parties are unable to come to an agreement, they must first attend mediation to try and resolve a lease dispute before a lessor can take certain actions against the lessee.
For more information, review the Commercial leases and COVID-19 FAQs on the Small Business Commissioner website or call 1300 795 534.