COVID-19 changes for commercial landlords and tenants

After the Federal Government announced that a moratorium on evictions and a commercial code of conduct would be put in place to help those suffering financial hardship due to coronavirus (COVID-19), each State Government was left to determine the specific details as part of their legislation.  

This can be confusing to understand, so we have pulled together some information to help commercial landlords and tenants understand how these changes may impact them.

Temporary legislation 

Recently, the Commercial Tenancies (COVID-19 Response) Act 2020 has come into play, however the code of conduct that is referred to in the Act is yet to be finalised and will be done so in the coming weeks. 

The Act will be backdated to 30 March 2020 until the 30 September 2020 – note this date can be shortened or extended where necessary and will be repealed 12 months after the emergency period has finished. 

Why is it being updated? 

The temporary legislation aims to help small commercial tenants that are now in financial distress to survive the current economic conditions due to the unforeseen economic impacts of COVID-19.  

The idea behind this is to ensure that those who are struggling now can reopen their doors to trade once the restrictions are lifted and continue business as they would have prior to the outbreak occurring.  

If a tenant is evicted due to not being able to pay rent, the owner could spend more time trying to find a new tenant and losing more rent coming in, than they would in assisting the current tenant who is struggling.  

What is included in the Act? 

Apart from the eviction moratorium, the legislation also includes: 

• Rents cannot be increased during the emergency period. 

• For those that are unable to pay their rent due to a loss of include from COVID-19, no interest will be charged on rent arrears.  

• An enhanced dispute resolution process with the Small Business Commissioner will be introduced for those who can not reach an agreement.  

• Restriction on penalties for tenants who do not trade or reduce their trading hours. 

• Property owners are prohibited on progressing proceedings that occurred after the restrictions were imposed but before these laws come into operation. 

Commercial code of conduct 

In addition, a mandatory code of conduct will be established which will aim to assist with negotiations between landlords and tenants, to agree on rent relief measure.  

At this stage, this is still being drawn up by the Department of Mines, Industry Regulation and Safety (DMIRS) and REIWA has sent a submission to DMIRS outlining what we as an industry body believe will help both property owners and tenants during this process.  

More information 

REIWA has pulled together a list of frequently asked questions in relation to the new legislation, which may provide you with a more detailed explanation.  

In addition, visit the DMIRS website which has more information for commercial landlords and tenants.  

Your REIWA agent is also a valuable source of information. Make sure to contact them if you have any further questions.