BusinessCommercialPropertyRetail

COVID-19 Legislation Amendment (Emergency Measures) Bill 2020 and Retail Leases

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The COVID-19 Legislation Amendment (Emergency Measures) Bill 2020 has now been assented to, coming into law from 25 March 2020.

The Emergency Measures Bill

The Bill has enabled the Minister to make regulations that would:

  1. Prohibit a landlord taking possession of premises in particular circumstances;
  2. Prohibit a landlord from terminating a lease in particular circumstances;
  3. Preventing a landlord from enforcing any other right relating to a lease in particular circumstances
  4. Exempting a tenant from operation of a provision of the Act or a lease of the premises.

At this stage, we don’t know what “in particular circumstances” means but this does confirm that any landlord seeking to take possession of leased premises because of unpaid rent due to a closure of a business will be prohibited.

Steps to take now

If you’re a business that has been forced to stop trading or substantially change how you can trade from your premises then you should:

  1. Contact your landlord/managing agent to discuss deferring your rent or a rent reduction. Landlord are also being placed in financial difficulty as they will have mortgage repayments that will still require payment. That’s why it’s important for both landlord and tenants to work together in the interim to find a solution for rent. In light of the Emergency Measures Bill, landlord will not be able to avoid this discussion as they will be prohibited from terminating a lease for non-payment of rent so there is a greater incentive to find a solution.
  2. Be aware that a rent deferral is not a waiver of rent. As we are seeing with the banks, any deferral of payments will need to be made up at a later time. Some option for retail tenants when negotiating a deferral of rent would be to have the repayments payable based on turnover once trading can resume so that the payment are staggered.

This article is intended to be general advice only and you should seek legal advice for your particular circumstances.

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