The Commercial Tenancies (COVID-19) legislation applies to small commercial leases, however, some parts of the legislation, such as the WA Code, only apply to an "eligible tenant".

See the COVID-19 commercial tenancies fact sheet and negotiations flowchart for details about how the laws applied during the emergency period.

Protections in the Commercial Tenancies (COVID-19 Response) Act 2020 (WA) included a:

• moratorium on evictions due to non-payment of rent;
• freeze on rent increases;
• restriction on penalties for tenants who do not trade or reduce their trading hours; and
• 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.

For the period from 30 March 2020 to 29 September 2020 these protections applied to all small commercial leases.  From 30 September 2020 to 28 March 2021 these protections applied only to eligible tenants.

Under the WA Code, landlords and tenants were required to negotiate in good faith to reach temporary arrangements about rent relief to be provided by landlords for rent due during the emergency period. 

The WA Code only applied to "eligible tenants".

The WA Code required landlords and tenants to act reasonably and in good faith with openness, honesty and transparency.

Commercial tenants and landlord needed to provide each other with sufficient and accurate information for the purposes of negotiations and not make onerous demands of one another.

The WA Code outlined a process for tenants to request rent relief. Landlords were 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 WA Code also requires the parties to agree on how deferred rent is to be paid. This could commence at the end of the emergency period or at the end of the lease term (whichever is earlier). The minimum period for payment is 24 months or the length of the lease term (whichever is greater).

If rent is deferred, the WA Code requires a landlord to offer the tenant an extension of the lease equivalent to the period for which rent is deferred. Some exceptions apply.

Rent relief can be adjusted from time to time (but not more than once a month), to take into account variations in loss in turnover. For example, as a tenant’s business recovers and turnover increases, then rent relief should decrease by the same proportion.

The WA Code also dealt with recovery of outgoings and expenses and confidentiality obligations. 

If an agreement could not be reached under the WA Code, the Small Business Commissioner was available to assist to resolve the dispute. Disputes could be taken to the State Administrative Tribunal if they could not be resolved by the Commissioner.  A request for assistance from the Small Business Commissioner or SAT needed to be made by 27 May 2021.

See the COVID-19 commercial tenancies fact sheet and negotiations flowchart for details about how the laws and WA Code applied.

If you were experiencing difficulties negotiating with your landlord or tenant please contact the Small Business Development Corporation for advice and assistance.

The requirements of the Commercial Tenancies (COVID-19) legislation do not apply in relation to rent and other amounts payable under the lease after 28 March 2021. This means:

• there is no further requirement for the landlord to provide rent relief to a tenant – the tenant will be required to pay the rent payable under their lease before any rent relief arrangements were put in place;
• deferred rent may become payable; and
• rent may be increased - but only under the terms of the lease.

A request for rent relief relating to the emergency period needed to be made by a tenant by 27 May 2021. I

Landlords can increase rent in relation to all small commercial leases, but only in accordance with the terms of the lease. 

This means a landlord cannot ask for more rent than the amount set out in the lease agreement. Any rent reviews must also be conducted in line with the terms of the existing lease. This means that rent can only be reviewed at the time (on the rent review date) and on the basis (e.g. consumer price index, fixed percentage increase, etc.) set out in the lease. 

If the tenant was not an eligible tenant, rent could be increased in accordance with the lease from 29 September 2020.

The SBDC website provides general information on rent and rent reviews.

The WA Code required the parties to agree on how and when deferred rent is to be paid. Payment of deferred rent could commence after the emergency period has ended.

The landlord cannot require the tenant to pay the deferred rent as a lump sum. Payment of deferred rent is to be spread out over a minimum period of 24 months or over the remaining length of the lease - whichever is longer.

In most circumstances, the landlord must offer the tenant an extension of the lease on the same terms and conditions and for the same period of time for which the rent was deferred during the emergency period. 

For example, if the landlord has agreed to defer the rent for a six month period, then the landlord must offer to extend the lease by six months.

The tenant doesn’t have to agree to this extension. In addition, the requirement to offer an extension of the term does not apply if it is inconsistent with a head lease, or other agreement or contract already entered into by the landlord with another person (for example, if the landlord has already entered into an agreement to lease the premises to a new tenant).

The Commercial Tenancies (COVID-19) legislation prevented landlords from exercising certain rights under the lease during the emergency period. For example, terminating a lease for default, charging interest on arrears and enforcing a guarantee or bond.

After 28 March 2021:

• the landlord can take action for a breach that occurs after the end of the emergency period; and
• the landlord can take action for a breach that occurred during the emergency period provided the breach is not the subject of an unresolved dispute being dealt with by the Small Business Commissioner or the State Administrative Tribunal.

Landlords and tenants should obtain legal advice regarding whether the obligation to repay the deferred rent will pass on to any assignee of the lease. This may depend on the wording of the rent relief arrangements and legal advice should be sought.

If you have a dispute about something that arose during the emergency period that was not resolved before you wished to seek assistance, you needed to do this by 27 May 2021, either by applying to the Small Business Commissioner or State Administrative Tribunal (SAT). 

If you sought assistance from the Small Business Commissioner or the State Administrative Tribunal before 27 May 2021, the Commercial Tenancies (COVID-19) legislation continues to apply until 28 March 2022, to allow time for disputes that occurred during the emergency period to be resolved.

If an application was not made within the timeframe, the right to do so has been lost.

SBDC offers a free dispute resolution service.

Landlords and tenants have been encouraged to continue to work together during the recovery period. They should start talking to each other as early as possible to avoid any future problems.

Tenants need to make sure they can meet any increase in their financial obligations. This will include the requirement to pay the rent under their lease agreement (i.e. the pre-emergency period rent) plus any deferred rent.

The tenant must provide sufficient and accurate information to show the reduction of turnover during the emergency period (or a relevant part).

This could include:

• sales reports from an accounting system;
• copies of business activity statements (BAS).

The parties are not permitted to make onerous demands for information, for example:

• future cash flow projections;
• balance sheets, or profit and loss, or year to date financials;
• bank balance details or statements; and
• for financial information to be verified, audited or provided by a third party such as an accountant.

A tenant will need to show that they were an eligible tenant for any time during the emergency period for which they wish to seek rent relief or other protections.

Eligibility for JobKeeper and the Commercial Tenancies (COVID-19) legislation were assessed periodically. The relevant periods were:

• 30 March 2020 to 27 September 2020;
• 28 September 2020 to 3 January 2021; and
• 4 January 2021 to 28 March 2021.

For each period a tenant must have shown a relevant decline in turnover. The details of the turnover tests were set out in the WA Code. 

Visit the Australian Tax Office COVID-19 information for more details. 

Assessment of loss in turnover may have been carried out more often (but not more frequently than monthly) in order to determine the amount of rent relief. This would have allowed for adjustment of that relief as a tenant’s financial circumstances changed. Landlords and tenants should work together to agree on an appropriate timeframe that suits their circumstances. 

If the tenant’s circumstances changed and they became eligible at a point during the emergency period, they could make a written request to the landlord for rent relief. The landlord and tenant needed to negotiate in accordance with the WA Code. 

A request for rent relief relating to the emergency period must have been made by a tenant by 27 May 2021. If negotiations about rent relief were not finalised the parties needed to have sought assistance to resolve the matter by 27 May 2021 (from the Small Business Commissioner or the State Administrative Tribunal).

Yes, the tenant was an eligible tenant because they have suffered the same loss of turnover applicable to qualify for JobKeeper. The code of conduct would have applied (including the requirement to provide rent relief).

From 29 September 2020, a landlord has been allowed to take action to enforce their rights if a tenant is insolvent or bankrupt. 

You must have made the request by 27 May 2021 and it could only relate to loss of turnover your business suffered during the emergency period.

My landlord gave me a long checklist of the documentation I must provide for them to consider my rent relief request. Under the WA Code, what proof do I need?

A tenant must provide sufficient and accurate information to demonstrate the reduction of turnover of a business during the emergency period (or a relevant part).

This could include:

• sales reports from an accounting system;
• copies of business activity statements (BAS).

The parties cannot make onerous demands for information, for example:

• future cash flow projections;
• balance sheets, or profit and loss, or year to date financials;
• bank balance details or statements; and
• for financial information to be verified, audited or provided by a third party such as an accountant.

I didn’t qualify for JobKeeper, but I am struggling due to reduced turnover during the emergency period. Can I ask the landlord to consider offering rent relief?

If you suffered the same level of loss used for the JobKeeper tests (30 per cent for businesses and 15 per cent for not-for-profits) then you were an eligible tenant, and could have requested rent relief under the WA Code in relation to the emergency period.