Commercial tenancy support

Commercial tenancy support

Commercial tenancy support

The WA Government has passed new laws to offer greater protection for small commercial tenants who are in financial distress resulting from restrictions imposed to combat the COVID-19 pandemic. The legislation aims to help to protect small business tenants from a range of prohibited actions, while they try to negotiate rent relief with their landlords.

Key elements of the legislation include:

  • a six-month moratorium on evictions for certain commercial tenancies (backdated to 30 March 2020)
  • a freeze on rent increases
  • restriction on the penalties for tenants who do not trade or reduce their trading hours
  • no interest to be charged on rent arrears
  • an enhanced dispute resolution process
  • landlords being prohibited from progressing proceedings that occurred after the restrictions were imposed, but before these laws come into operation.

The legislation will be complemented by a WA code of conduct. Currently under development, the WA code – to be based on the National Cabinet Code of Conduct released on 7 April – will provide a framework for negotiations to agree on rent relief measures, to be carried out in good faith between landlords and tenants.

The laws, which come into effect this week, will allow for the emergency moratorium period to be varied by regulation if required.

This legislation applies to small commercial leases during the emergency period, which (at this stage) is six months from 30 March 2020 to 29 September 2020, and covers:

  • a retail shop lease as defined in the Commercial Tenancy (Retail Shops) Agreements Act 1985, or
  • a lease where the tenant is a small business as defined in the Small Business Development Corporation Act 1983, or
  • a lease where the tenant is an incorporated association as defined in the Associations Incorporation Act 2015.

Negotiations between tenants and landlords

As part of the negotiations, the impact of the pandemic on the tenant’s revenue, expenses and profitability should be considered when determining which temporary changes would be appropriate, such as waivers, deferrals and/or reductions in rent. It is anticipated that negotiations should include the financial impact be shared between the tenant and landlord.

Further details will be available shortly.

Source - Small Business Development Corporation article available here.

Our team can be contacted here if you need support or advice through this difficult time.

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