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.

WA commercial tenants and landlords urged to do the right thing during COVID-19

Small Business Commissioner, David Eaton, is calling on small business tenants and landlords to work together and not seek opportunities to exploit the current pandemic situation. 

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 (yet to be determined).

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 (still to be prescribed).
  • 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 the 7 April 2020, the National Cabinet released the National Cabinet Mandatory Code of Conduct (‘the Code’) – Small to Medium (SME) Commercial Leasing Principles during COVID-19 and announced that States and Territories would implement the Code via legislation or regulation.

In WA, the Code will apply to small commercial leases via regulations under the Commercial Tenancies (COVID-19 Response) Act 2020.

The WA Government is urgently working on the Code and will make appropriate modifications for Western Australia.

The Code’s purpose is to ensure negotiations between landlords and tenants are carried out in good faith so that 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.

For more information see the National Cabinet Mandatory Code of Conduct or visit Small Business Development Corporation's Dealing with coronavirus webpage.

When will WA’s code of conduct be ready?

WA’s code of conduct is a top priority for Consumer Protection and is coming soon. We know commercial tenants and landlords are waiting on the mandatory code to assist with negotiations and we’re getting it ready as quickly as we can – it should be finalised by the end of May 2020 and will be linked to from this section of our website.

We’re working closely with the Small Business Development Corporation and other stakeholders including representatives of both landlords and tenants. We are keen to consult and get WA’s code right but also recognise the need for urgency. What we can tell you now is that WA’s code will be 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 that:

  • 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).

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 Dealing with coronavirus page and New commercial tenancy legislative changes page.

For COVID-19 information related to other consumer issues visit Consumer Protection's COVID-19 coronavirus Consumer Protection FAQ

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