Commercial tenancies - COVID-19 response
The Commissioner for Consumer Protection has issued some advice about your commercial tenancy rights and responsibilities during the COVID-19 coronavirus pandemic. The video and frequently asked questions below address commercial tenancy issues and how they are covered by legislation. This information will be updated regularly as new guidance is available.
Terms we use on this page
Commercial Tenancies (COVID-19) legislation = Commercial Tenancies (COVID-19 Response) Act 2020.
Emergency period = six months from 30 March 2020, with the possibility of extension.
New commercial tenancy code of conduct to assist during COVID-19
What financial assistance is available?
- Australian Government small business stimulus/relief package: Visit the Small Business Development Corporation website for details.
- WA Government land tax assistance program: In response to issues faced by the landlords of commercial properties whose small business tenants have been impacted by the COVID-19 coronavirus pandemic, the WA Government announced a $100 million land tax assistance program. Applications opened on 1 May 2020 and commercial landlords are invited to view the eligibility criteria and register for more information about the program via the Small Business Development Corporation.
How do I know if Commercial Tenancies (COVID-19) legislation applies to me?
This new legislation, the Commercial Tenancies (COVID-19 Response) Act 2020, applies to small commercial leases during the emergency period.
A small commercial lease is a:
- retail shop lease as defined in the Commercial Tenancy (Retail Shops) Agreements Act 1985 (CTA Act); or
- lease where the tenant is a small business as defined in the Small Business Development Corporation Act 1983 (SBDC Act);
- lease where the tenant is an incorporated association as defined in Associations Incorporation Act 2015 (AI Act); or
- another type of lease prescribed in the regulation.
What protections does the legislation contain?
Protections in the legislation include:
- A six-month moratorium on evictions due to non-payment of rent.
- A freeze on rent increases.
- A restriction on penalties for tenants who do not trade or reduce their trading hours.
- A prohibition on landlords making a claim on any form of security (e.g. a bank guarantee or security deposit) for the performance of the tenant’s obligations under the lease.
- A prohibition on landlords progressing action against a tenant for a breach that occurred after 30 March 2020, but before commencement of the new laws.
- Allows for a code of conduct to be adopted for small business commercial lease matters in WA.
- A resolution mechanism for disputes arising out of, or in relation to, the operation of the legislation or code of conduct, including a mechanism to protect landlords where tenants are refusing to pay rent despite the capacity to do so.
Does the National Code apply to me?
On 7 April 2020, the National Cabinet released the Mandatory Code of Conduct – Small to Medium Enterprises (SME) Commercial Leasing Principles during COVID-19 and announced States and Territories would implement the Code via legislation or regulation.
In WA, the Code applies to small commercial leases via regulations under the Commercial Tenancies (COVID-19 Response) Act 2020.
The WA Government made appropriate modifications to the National Code to ensure it was suitable for Western Australia.
For more information see the National Cabinet Mandatory Code of Conduct.
What is the purpose of the code of conduct?
The code’s purpose is to ensure negotiations between landlords and tenants are carried out in good faith so agreements can be reached on temporary changes to small commercial leases during the moratorium period.
The impact COVID-19 has had on a tenant (including impacts on revenue, expenses and profitability) should be taken into consideration during negotiations to determine what temporary changes are appropriate, such as deferrals and/or reductions in rent payments.
Where can I find WA’s code of conduct?
We know commercial tenants and landlords have been waiting on the code to assist with negotiations and it has been a top priority for Consumer Protection. We have been consulting and working closely with the Small Business Development Corporation and other stakeholders, including representatives of both landlords and tenants during development of the WA code.
WA’s code is based on the national code principles outlined in this video:
The national code requires landlords and tenants to negotiate in good faith and outlines a set of principles, including:
- landlords must not terminate leases for non-payment of rent during the COVID-19 pandemic (or reasonable recovery period);
- tenants must stay committed to their lease terms (subject to amendments);
- landlords must offer reductions in rent (as waivers or deferrals) based on the tenant’s reduction in trade during COVID-19; and
- benefits that owners get for their properties (e.g. reduced charges, land tax, deferred loan payments) should be passed on to the tenant (in the appropriate proportion).
Does the WA code apply to me?
What does WA’s code say?
- offer relief at least proportionate to the reduction in turnover that the business has suffered; and
- provide at least half of that rent relief as a waiver, with the rest to be either deferred or waived.
The code also deals with recovery of outgoings and expenses and confidentiality obligations.
I’m a commercial tenant, how do I use the code to negotiate with my landlord?
Get your financial records ready to prove a turnover decrease of 30 per cent or more and write to, or email, your landlord.Your landlord must respond within 14 days.
For practical advice on the best way to reach an agreement on rent relief under the new code, visit the Small Business Development Corporation's website.
You can also watch their video:
What if we can’t reach an agreement under the code?
If an agreement cannot be reached under the code, the Small Business Commissioner can mediate or conciliate.
Disputes can be taken to the State Administrative Tribunal if they cannot be resolved through conciliation.
I am having difficulties negotiating with my landlord/tenant, what can I do?
If you are experiencing difficulties negotiating with your landlord or tenant please contact the Small Business Development Corporation for advice and assistance.
For further advice and assistance
Visit the Small Business Development Corporation's pages: Dealing with coronavirus, New commercial tenancy legislative changes and small business tenants and landlords to work together.
Additional information (external links)
- WA Government - WA small businesses to receive $17,500 grant to assist during COVID-19 (16 July)
- ACCC - Insurers to be authorised to continue relief measures for small businesses (10 June)
- WA Government - Procurement changes to help boost local businesses during COVID-19 (27 May)
- WA Government - Supporting WA businesses re-opening through COVID-19 (15 May)
- WA Government - McGowan Government exercises new powers to help ratepayers (8 May)
- ACCC - The very bad, and some good, from COVID-19 (5 May)
- ACCC - Retailers granted authorisation to collectively negotiate with landlords (22 April)
- ACCC - Shopping centres to co-operate to support retail tenants (3 April)
- ACCC - Small business guidance about refunds and cancellations due to COVID-19 (2 April)
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