Commercial tenancies - COVID-19 response

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Commercial tenancy

Information for landlords and tenants

The protections in the Commercial Tenancies (COVID-19) legislation helped to provide stability in the commercial tenancy market.  Now the emergency period has ended, landlords and tenants are encouraged to continue to work together.

Read on for further information about the Commercial Tenancies (COVID-19) legislation and what the end of the emergency period means for landlords and tenants.

COVID-19 commercial tenancy laws have come to an end

The Commercial Tenancies (COVID-19) laws were repealed (ended) on 28 March 2022.

Why were the Commercial Tenancies (COVID-19) laws repealed (ended)?

The Commercial Tenancies (COVID-19) laws were always intended to be a temporary measure to provide support for commercial tenants and landlords.

This was part of a range of measures to support commercial tenants and landlords impacted by COVID-19, including payroll tax relief for landlords; grants to cover losses due to lockdowns; and financial assistance targeting impacted businesses.

What does this mean for tenants and landlords?

This means that the moratorium on evictions, freeze on rent increases and obligations on landlords to give rent relief no longer apply.

In addition, commercial tenants can no longer request rent relief or commence dispute resolution under the Commercial Tenancies (COVID-19) laws.

Does the Code of Conduct still apply?

No.

The mandatory Code of Conduct which required tenants and landlords to negotiate in good faith to reach temporary arrangements about rent relief no longer applies.

What support is available for commercial tenants and landlords impacted by COVID- 19?

Assistance is still available for commercial tenants and landlords impacted by COVID–19 through a range of targeted measures introduced by the McGowan Government.

Please visit the Small Business Development Corporation's website for the latest COVID-19 updates and information about grants and other support measures.

Do tenants still have the right to rent relief and access to dispute resolution under the Commercial Tenancies (COVID-19) laws?

No.

Eligible tenants were given extra time to request rent relief or commence dispute resolution under the Commercial Tenancies (COVID-19) law but this ended on 27 May 2021.

What if I need help with a commercial tenancy dispute?

You can still seek assistance with disputes through the Small Business Development Corporation’s free dispute resolution service, but not in relation to disputes which specifically came under the Commercial Tenancies (COVID-19) law.

Are agreements made between tenants and landlords under the Commercial Tenancies (COVID-19) laws still in effect?

Even though the Commercial Tenancies (COVID-19) laws have now ended, some agreements reached between tenants and landlords under these laws may still be in effect.

For example, some agreements to defer rent payments may still be in effect.

The FAQ’s below provide further information about what this means for tenants and landlords as well as general information about the Commercial Tenancies (COVID-19) laws.

Is a landlord still required to offer a tenant rent relief?

No.

Landlords are no longer required to provide rent relief to tenants.

This is because the Commercial Tenancies (COVID-19) law no longer applies.

Tenants are required to pay the rent payable under their lease agreement.

Although not a requirement, given the ongoing impacts of COVID-19, where tenants are having difficulties meeting their rent payments, landlords are strongly encouraged to negotiate with their tenants.

How long could rent payments be deferred?

It is important to check the agreement to defer rent payments.

Under the (repealed) Commercial Tenancies (COVID-19) law, rent payments could be deferred either until the end of the emergency period (28 March 2021), or until the end of the lease term - whichever was earlier.

Now the emergency period has ended, can a landlord ask a tenant to pay deferred rent as a lump sum?

No.

A landlord cannot require a tenant to pay the deferred rent owed as a lump sum.

How long do tenants have to pay deferred rent?

This will depend on the agreement reached. It was a requirement that landlords give tenants at least 24 months or the remainder of the lease term (whichever was greater) to repay deferred rent.

It is important to check the agreement.

Does a tenant have to pay rent as set out in the lease agreement as well as any deferred rent?

Yes, a tenant will need to pay rent as outlined in their lease agreement as well as deferred rent.

The amount of time a tenant has to pay the deferred rent will depend on the agreement reached.

What if a tenant can’t afford to meet the rent payments?

Not making rent payments is a breach of the lease agreement and, depending on the lease agreement, may be grounds to terminate the lease.

If tenants are struggling to meet their commitments under the lease, landlords and tenants are strongly encouraged to work together to reach a mutual agreement where possible.

Check the Small Business Development Corporation's website for more information.

What happens to the obligation to pay deferred rent if a tenant assigns the lease to another tenant?

It is important to obtain legal advice about 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.

What happens to the term of the lease if rent payments were deferred?

Check your agreement to defer rent payments.

If rent payments were deferred, landlords were required to offer tenants a lease extension equivalent to the period for which rent was deferred. (Some exceptions applied.)

For example, if the landlord agreed to defer the rent for a six month period, then the landlord was required to offer to extend the lease by six months. Tenants were not, however, required to accept the offer of an extension.

Can landlords take action against tenants for a breach of the lease agreement?

Yes, as long as the breach doesn’t relate to a breach which:

  • occurred during the emergency period under the Commercial Tenancies (COVID- 19) law (which applied between 30 March 2020 and 28 March 2021); and
  • is the subject of an unresolved dispute being dealt with by the Small Business Commissioner or the State Administrative Tribunal.

Between 30 March 2020 and 28 March 2021, the Commercial Tenancies (COVID-19) law 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.

Now the Commercial Tenancies (COVID-19) law no longer applies, landlords are able to exercise all of their rights under the lease agreement.

Be aware that under the Commercial Tenancies (COVID-19) law it was a requirement that tenants be given at least 24 months or the remainder of the lease term - whichever was greater to repay their outstanding rent.

The amount of time a tenant has to pay the deferred rent will depend on the agreement reached.

What is meant by the Commercial Tenancies (COVID-19) laws?

The (repealed) Commercial Tenancies (COVID-19) laws included the:

Note: The Regulations (referred to above) included a mandatory Code of Conduct which required tenants and landlords to negotiate in good faith to reach temporary arrangements about rent relief.

What was the purpose of the Commercial Tenancies (COVID-19) laws?

Between 30 March 2020 and 28 March 2021, the Commercial Tenancies (COVID-19) laws provided temporary relief for tenants impacted by COVID-19 including:

  • a moratorium on evictions due to non-payment of rent;
  • a freeze on rent increases; and
  • an obligation on landlords to give rent relief.

What types of leases did the Commercial Tenancies (COVID-19) laws cover?

The (repealed) Commercial Tenancies (COVID-19) law applied to small commercial leases.

This included:

  • a retail shop lease as defined in the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA); or
  • a lease where the tenant is a small business as defined in the Small Business Development Corporation Act 1983 (WA);
  • a lease where the tenant is an incorporated association as defined in the Associations Incorporation Act 2015 (WA); or
  • another type of lease prescribed in the Commercial Tenancies (COVID-19 Response) Regulations 2020 (WA) (now repealed).

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