March 30, 2020

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NSW emergency legislation

In an earlier post we referred to NSW legislation giving the Minister power to create emergency regulations to prevent the termination of leases during the COVID-19 crisis.

The NSW legislation is now available here: https://www.legislation.nsw.gov.au/acts/2020-1.pdf

The text relevant to commercial and retail tenancies is set out below.

It is worth noting that:

  1. Although a state-by-state approach has been suggested, we can expect something similar in Victoria.
  2. The NSW legislation only allows the creation of regulations by the Minister.  We have yet found any regulations made under the new powers, but they are expected any day now.
  3. The legislation allows the creation of regulations that prevent termination for more than just non-payment of rent.  For example:
    • the new sub-s 87(1)(a) of the Retail Leases Act 1994 (NSW) allows regulations that prohibit any terminations;  and
    • the new s 87(1)(c) of the Retail Leases Act 1994 (NSW) allows regulations to regulate or prevent the exercise of another right of a lessor or owner of premises or land … in particular circumstances’. This could, for instance, be used to create regulations preventing a landlord calling on a guarantee during the pandemic or suing under a personal guarantee or indemnity.
  1. The legislation allows regulations under residential, retail and agricultural tenancies, as well as ‘any other Act relating to the leasing of premises or land for commercial purposes’.  It is not clear what that additional legislation could be.  However:
    • in Victoria, Part II, Division 5 of the Property Law Act 1958 (Vic) regulates leases and tenancies generally;  and
    • in Victoria, the Retail Leases Act 2003 (Vic) has broader application than its NSW counterpart in light of the operation of the ‘ultimate consumer test’.
  1. The regulations sunset after 6 months.

The text of the NSW legislation amending the Residential Tenancies Act 2010 (NSW) is set out below.

2.17 Residential Tenancies Act 2010 No 42 Part 13

Insert after Part 12—

Part 13 Response to COVID-19 pandemic 229 Regulation-making power

(1)  The regulations under any relevant Act may provide for the following matters for the purposes of responding to the public health emergency caused by the COVID-19 pandemic—

(a)  prohibiting the recovery of possession of premises by a landlord, owner or proprietor of premises from a tenant or resident of the premises under the relevant Act in particular circumstances,

(b)  prohibiting the termination of a residential tenancy agreement, occupancy agreement or site agreement by a landlord, proprietor of premises or operator of a community under the relevant Act in particular circumstances,

(c)  regulating or preventing the exercise or enforcement of another right of a landlord, proprietor of premises or operator of a community by the landlord, proprietor or operator under the relevant Act or an agreement relating to the premises,

(d)  exempting a tenant, resident or home owner, or a class of tenants, residents or home owners, from the operation of a provision of the relevant Act or any agreement relating to premises.

(2)  The Minister may recommend to the Governor that regulations be made under this section only if—

(a)  Parliament is not currently sitting and is not likely to sit within 2 weeks after the day the regulations are made, and

(b)  in the Minister’s opinion, the regulations are reasonable to protect the health, safety and welfare of tenants or residents under the Act.

(3)  Regulations made under this section are not limited by the regulation-making power in a relevant Act.

(4)  Regulations made under this section expire on—

(a)  the day that is 6 months after the day on which the regulation commences, or

(b)  the earlier day decided by Parliament by resolution of either House of Parliament.

(5)  In this section—

occupancy agreement has the same meaning as in the Boarding Houses Act 2012.

operator of a community has the same meaning as in the Residential (Land Lease) Communities Act 2013.

proprietor has the same meaning as in the Boarding Houses Act 2012.

relevant Act means any of the following—

(a)  Boarding Houses Act 2012,

(b)  Residential (Land Lease) Communities Act 2013,

(c)  Residential Tenancies Act 2010,

(d)  any other Act relating to the leasing of premises or land for residential purposes.

site agreement has the same meaning as in the Residential (Land Lease) Communities Act 2013.

The text of the NSW legislation amending the Retail Leases Act 1994 (NSW) is set out below.

2.18 Retail Leases Act 1994 No 46 Part 11

Insert after Part 10—

Part 11 Response to COVID-19 pandemic 87 Regulation-making power

(1)  The regulations under any relevant Act may provide for the following matters for the purposes of responding to the public health emergency caused by the COVID-19 pandemic—

(a)  prohibiting the recovery of possession of premises by a lessor or owner of premises or land from a lessee or tenant of the premises or land under the relevant Act in particular circumstances,

(b)  prohibiting the termination of a lease or tenancy by a lessor or owner of premises or land under the relevant Act in particular circumstances,

(c)  regulating or preventing the exercise or enforcement of another right of a lessor or owner of premises or land under the relevant Act or an agreement relating to the premises or land in particular circumstances,

(d)  exempting a lessee or tenant, or a class of lessees or tenants, from the operation of a provision of the relevant Act or any agreement relating to the leasing or licensing of premises or land.

(2)  The Minister may recommend to the Governor that regulations be made under this section only if—

(a)  Parliament is not currently sitting and is not likely to sit within 2 weeks after the day the regulations are made, and

(b)  in the Minister’s opinion, the regulations are reasonable to protect the health, safety and welfare of lessees or tenants under the Act.

(3)  Regulations made under this section are not limited by the regulation-making power in a relevant Act.

(4)  Regulations made under this section expire on—

(a)  the day that is 6 months after the day on which the regulation commences, or

(b)  the earlier day decided by Parliament by resolution of either House of Parliament.

(5)  In this section—
relevant Act means any of the following—

(a)  Agricultural Tenancies Act 1990,

(b)  Retail Leases Act 1994,

(c)  any other Act relating to the leasing of premises or land for commercial purposes.

Sam Hopper and Abilene Singh

March 30, 2020

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Banks announce moratorium on loans repayments if commercial tenants not evicted

The Age has published that:

Banks will allow commercial landlords with loans of up to $10 million to delay their loan repayments by up to six months, on the condition tenants are not evicted due to the coronavirus crisis.

For more information, see https://www.theage.com.au/national/victoria/coronavirus-victoria-updates-live-stricter-social-distancing-measures-kick-in-as-australia-s-covid-19-infection-rate-falls-20200329-p54ezy.html

See also: https://www.ausbanking.org.au/banks-to-help-commercial-landlords-who-help-tenants/

 

March 29, 2020

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PM announces 6 month moratorium on termination of commercial and residential tenancies for non-payment of rent

The Prime Minister has just announced a 6 month moratorium on termination of commercial and residential tenancies for non-payment of rent.

The term commercial, presumably, also includes retail leases.

The Age website has reported this:

Mr Morrison has also announced a moratorium on evictions from commercial and residential rental properties.

He says states and territories will be implementing a six-month ban on evictions of people as a “result of financial distress if they are unable to meet their commitments”.

Mr Morrison says he wants landlords and tenants to work with each other and banks while the policy is worked on.

“We want people to sit down and work this out … There is no rule book for this,” he says.

The Herald-Sun reports that ‘more work will be done on commercial tenancies’.

It is not clear at this stage when the moratorium will start, but 1 April 2020 is as good a guess as any.

It is also unclear how ‘financial distress’ or a tenants ability to ‘meet their commitments’ will be defined or assessed.

March 27, 2020

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The Prime Minister has announced the following that affects landlords and tenants…

The theme of the presentation was to put the economy into hibernation by protecting businesses from unsustainable debt and rent arrears after the closure period.

The Prime Minister repeatedly signalled that 6 months is the period that the Government is considering.  However, we are yet to hear any more details of the package.

The suggestion appeared to be that commercial tenancies would be dealt with first, with residential tenancies to follow.

The Prime Minster foreshadowed that he and the Treasurer would have more to say in  “the next few days”.

The PM declined to answer a question seeking more details on the proposed hibernation, but did say that there are landlords that would need to suffer and banks would need to make arrangements with them.  Land tax relief was also foreshadowed.

The PM also highlighted that before locking a tenant out for not paying the rent and closing its doors, landlords should consider that the property can’t be re-let in the current environment and that it is sensible to consider the economic environment to ensure that everyone gets through.

Sam Hopper, Abilene Singh and Callum Dawlings

March 27, 2020

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Consumer Affairs information page about residential tenancies, inspection and auctions and owners corporations

Consumer Affairs Victoria has put up an information page in response to the COVID-19 crisis that gives information about, among other things, residential tenancies, inspection and auctions and owners corporations.

The website is available here: https://www.consumer.vic.gov.au/resources-and-tools/advice-in-a-disaster/coronavirus-covid19-and-your-rights?utm_medium=email&utm_campaign=Important+message+from+CAV+about+Coronavirus+%28COVID-19%29&utm_content=consumer.vic.gov.au%2Fresources-and-tools%2Fadvice-in-a-disaster%2Fcoronavirus-covid19-and-your-rights&utm_source=submit.consumer.vic.gov.au

Thanks to my colleague Bill Stark for sending this to me.

March 27, 2020

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ABC report on government measures for COVID-19, including reference to rent payable during closure periods

The ABC have posted an article foreshadowing the Federal Government’s package to help the country through the COVID-19 crisis.

The report includes the following that is relevant to landlords and tenants:

Banks, lenders and landlords would all be asked to wear some of the pain, waiving all overheads including rents and mortgage repayments for at least the next six months.

 …

National Cabinet is expected to sign-off on relief for commercial and residential renters today, with state leaders moving to prevent evictions during the downturn.

For more details, see: https://www.abc.net.au/news/2020-03-27/coronavirus-business-hibernation-australia-responds-to-pandemic/12095738

March 27, 2020

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More closures, but few answers

In the absence of any definitive answers from either the Federal or State Governments my colleague Elizabeth Ruddle continues to trawl the media for news on the retail leasing sector and has sent me the information below.

Following on from reports yesterday that Premier Brands will be closing their stores until April and have unilaterally made the decision not to pay rent, the Australian Financial Review is today reporting that other major bands are likewise closing and not intending to pay rent. Full report here: https://www.afr.com/companies/retail/retailer-rent-revolt-hits-mall-landlords-20200326-p54e6e

As has previously been mentioned on the blog, some Commercial and Shopping Centre Landlords have already indicated a willingness to negotiate or provide rent relief. Woolworths are latest to make such an announcement: https://www.shoppingcentrenews.com.au/shopping-centre-news/industry-news/woolworths-group-helps-small-business-with-rental-relief-and-employment-opportunities/

Of course, none of this helps tenants outside the major shopping centre chains nor is there any clarity for small landlords. In the absence of any formal changes to the operation of either the Retail Leases Act or the Property Law Act, right now it seems that negotiation with landlords is the best bet for tenants struggling with the effects of Covid-19. After all, landlords will be unlikely to find replacement tenants in the current environment.

March 26, 2020

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Covid-19 update: Property Council calls for Land Tax relief; more councils provide rent relief

As the Tasmanian Government has been debating its stimulus package, the Property Council has been pushing for relief for landlords in the form of Property Tax reductions or deferrals.

https://www.nationaltribune.com.au/property-council-of-australia-calls-for-urgent-utilities-state-and-local-government-relief/

https://www.propertycouncil.com.au/Web/Content/Media_Release/TAS/2020/PROPERTY_COUNCIL_OF_AUSTRALIA_CALLS_FOR_LAND_TAX_RELIEF.aspx

This is in line with the Victorian Government stimulus package announced last week which included the ability for commercial tenants in government buildings to apply for rent relief as well as the ability to defer land tax for eligible small businesses. The government announcement is below.

https://www.premier.vic.gov.au/economic-survival-package-to-support-businesses-and-jobs/

In addition to announcements by the City of Geelong, the City of Port Phillip has announced rental relief for its tenants.

http://www.portphillip.vic.gov.au/mar-2020-media_8930.htm

Elizabeth Ruddle

https://www.vicbar.com.au/profile/7530

Abilene Singh

https://www.vicbar.com.au/profile/9156

 

 

March 26, 2020

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Premier Investment shuts all of its stores until 22 April 2020

The Age has reported that Premier Investments will shut all of its stores until 22 April 2020 and will not be paying rent over the period. Premier Investments brands include Smiggle, Peter Alexander, Jay Jays, Just Jeans and Portmans.

For more information, see: https://www.theage.com.au/business/companies/retail-carnage-hundreds-of-stores-close-as-30-000-workers-stood-down-20200326-p54e1j.html