Commercial tenancies - COVID-19 response

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Commercial tenancy

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.

Commercial Tenancies (COVID-19 Response) Act 2020, by Consumer Protection

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

The WA Government has introduced a new code of conduct to help commercial tenants and landlords reach agreements about rent during the COVID-19 coronavirus pandemic.
 
Read more in the Commerce Minister's announcement or see the code on the Western Australian legislation website:  Commercial Tenancies (COVID-19 Response) Regulations 2020.

FAQs

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.

The WA version of the Code was published in the Government Gazette on Friday 29 May 2020 and will be available on the Western Australian Legislation website. 

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?

WA’s code of conduct was published in the Government Gazette on Friday 29 May 2020 and is available on the Western Australian Legislation website. 

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:

COVID-19 - Mandatory commercial tenancy code , by Australian Small Business and Family Enterprise Ombudsman Kate Carnell

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?

The code applies to small businesses, including retail stores, with an annual turnover of less than $50 million and which qualify for the JobKeeper scheme or have experienced a decline in turnover of 30 per cent or more during the emergency period (six months from 30 March 2020). Small charities only need to show a 15 per cent reduction in turnover. 
 

What does WA’s code say?

Western Australia’s code requires landlords and tenants to act reasonably and in good faith with openness, honesty and transparency.
 
The code guides commercial tenants and landlords to provide each other with sufficient and accurate information for the purposes of negotiations and not to make onerous demands of one another.
 
The code outlines a process for tenants to request rent relief and landlords are required to:
  • 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. 

The code was published in the Government Gazette on Friday 29 May 2020 and is also be available on the on the Western Australian Legislation website. 

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:

Rent relief for small commercial tenants in WA, by Small Business Development Corporation

 

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)

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