• 17 Jul 2020

Retail and Other Commercial Leases COVID-19 Regulation 2020

Who would have thought that the states in Australia would be controlling their borders in 2020? The fact remains that thanks to an invisible enemy, as of 8 July 2020, people entering from neighbouring states need entry permit to enter New South Wales.

With the backdrop of unprecedented times, the Retail & Other Commercial Leases (COVID - 19) Regulation 2020 (Regulations) commenced in NSW on 24 April 2020 under the Retail Leases Act 1994. These Regulations give effect to the Federal Government's the National Cabinet Mandatory Code of Conduct – SME Commercial Leasing Principles During COVID-19. 

In practical terms, the Regulations affect commercial as well as retail leases in NSW and in summary provide that:

  • Commercial and retail leases landlords in NSW cannot take enforcement action against the impacted lessees (tenants that qualify for JobKeeper and had their most recent turnover of less than $50million)

  • Commercial and retail leases landlords in NSW need to engage in good faith negotiations with their tenants to come to an agreement about rent reduction

  • The rent reduction will work by way of waiver of 50% of the reduced rent and the balance to be repaid over the agreed period or 24 months.

The Regulations were amended on 3 July 2020 to clarify that the Regulations apply only to impacted lessees and impacted leases.

"The Regulations take effect 

from 24 April 2020 and will 

automatically end 

on 23 October 2020 

unless extended further."

 Author: Ash Agarwal