On 13 May 2020, the COVID-19 Disease Emergency (Commercial Leases) Act 2020 received Royal Assent. The Act gives effect to the Code of Conduct for commercial tenancies (the Code) agreed upon by National Cabinet on 7 April 2020.
Who does the Act apply to?
The Act applies to parties to commercial leases, where the tenant is eligible for the JobKeeper program and has a turnover of less than $50 million per annum. The tenant does not need to have applied for JobKeeper but their circumstances must mean they are eligible.
A lease the Act applies to is known as a protected lease.
What does the Act mean for commercial tenants and landlords?
The Act is designed to:
- govern the conduct of commercial tenants and landlords and
- provide additional protections and rent reductions for tenants experiencing financial hardship due to COVID-19.
It also provides:
- a halt on evictions, taking possession or terminating a commercial lease due to non-payment of rent
- a freeze on rent increases
- a requirement that parties negotiate rent waivers or deferrals based on the commercial tenant’s reduced income due to COVID-19
- facilitated mediation services for commercial tenants and landlords accessed through Consumer Building and Occupational Services if parties cannot reach agreement.
When will the changes take effect?
The changes are in effect for the ‘financial hardship period’ which is currently from 1 April 2020 until 30 September 2020 . This period may be extended.
The Government's intent is that the financial hardship period be in line with the National Code. The Code is currently in effect while the Commonwealth JobKeeper program remains operational. This period can be revisited if the National Cabinet extends the Code or if there is a Tasmanian-specific reason to do so. At this stage, the period ends on 30 September 2020. The Act provides for the financial hardship period to stop 12 months after the Act commenced. It may end sooner if the Treasurer determines the Code is no longer required. This approach is similar to that taken for other COVID-19 legislation.