Tenants with protected commercial leases

What are my obligations as a tenant with a protected lease?

If you are unable to pay your rent, due to COVID-19 related financial hardship, you should first contact your landlord and begin negotiating a rent reduction. Your landlord has an obligation to negotiate with you.

You should continue to pay the rent you can afford while you negotiate.

The negotiated rent reduction should be in line with your decrease in turnover so you will need to quantify this as a starting point for negotiation.

A landlord is required to:

  • negotiate with you regarding the rent to be paid
  • not engage in misleading or deceptive conduct
  • provide accurate and sufficient information to enable negotiations and
  • not use or share any information provided except where expressly allowed or beyond the purpose it is provided.

It is important for tenants and landlords to communicate with each other about their situation as early as possible to try and reach an agreement.

Key steps you should take

  1. Keep paying rent that you can afford. You must continue to remain committed to the terms of your existing lease, subject to any changes that you renegotiate.
  2. Work out your reduction in turnover associated with the premises. You will be required to provide your landlord with information that is accurate and sufficient to demonstrate your financial circumstances.
  3. Advise your landlord in writing that you need to renegotiate rent through providing waivers and deferrals or other terms of the lease.
  4. Try to reach an agreement with your landlord on rent reduction either by waiver and/or deferral of rent. You need to consider your landlord’s financial circumstances, as well as your business, when negotiating rent relief.
  5. When you reach an agreement, put this in writing so both parties are clear on the terms and the effect it has on the existing lease agreement.
  6. If you cannot reach an agreement, you may apply for mediation.

Rent

How do I work out the amount of a rent reduction?

You are able to seek a rent reduction which is proportionate to your reduction in turnover. Any rent reduction will be the result of negotiation with your landlord and is required to have regard to the circumstances of each party.

The Code requires your landlord to offer proportionate rent reductions in the form of a waiver or deferral.

Waiving the rent

Rent waivers mean that the landlord waives the rent entirely and the tenant doesn't have to pay.

Rental waivers should be no less than 50% of the agreed rent reduction. The remainder is to be deferred. However, you may waive your rights to the 50% waiver by agreement with the landlord. Remember, the landlord’s financial position is also a factor in calculating the rent reduction.

Deferring the rent

The tenant pays deferred rent to the landlord in instalments until the end of the lease or within 24 months (whichever is greater). You may also negotiate this term with your landlord.

Negotiate first

Mediation can be a lengthy, expensive process. We recommend you try to reach an acceptable agreement with your landlord to resolve the matter quickly and with minimal cost to both of you.

Mediation and dispute resolution

If you are unable to reach an agreement with your landlord you can apply for mediation services through CBOS.

You will need to demonstrate that you have attempted to negotiate and supply information on your financial position.

CBOS will engage an independent mediator and you will be required to contribute to the costs associated.

Apply for mediation

If you are unable to complete the application form online, you can download and complete the Commercial lease mediation application form (DOCX, 94.7 KB) and email or post to CBOS:

Need more help?

Contact us if you need more information.

Related information

Updated: 03 Jun 2020