Tenants with protected commercial leases

IMPORTANT UPDATE: Landlords and tenants with protected commercial leases during COVID-19 (coronavirus) emergency period

The Tasmanian Government has announced that the financial hardship period will continue until 31 January 2021.

What are my obligations?

If you are unable to pay your rent, due to COVID-19 related financial hardship, you may be eligible for rent relief under the COVID-19 Disease Emergency (Commercial Leases) Act 2020. 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.

Your landlord is required to:

  • negotiate with you regarding the rent amount
  • not engage in misleading or deceptive conduct
  • provide accurate and sufficient information to enable negotiations, and
  • not use or share any information provided to you 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.
  4. Try to reach an agreement with your landlord on rent reduction either by waiver and/or deferral of rent. Your landlord must consider your financial circumstances and hardship, as well as their own, 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.


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

Both parties need to negotiate a rent reduction in line with the Act and the National Code.

Rent reductions should be:

  • in proportion to the reduction in turnover of the tenant’s commercial operations
  • in the form of a waiver or deferral, with at least 50% in the form of a waiver.

Deferred rent will be paid to the landlord in instalments until the end of the lease or within 24 months, whichever period is greater.

What is not included when renegotiating rent?

Rent renegotiations are to take into account the reduction in a tenant's turnover due to COVID-19.

When calculating what is ‘turnover’ some matters are not included.

What is ‘turnover’?

A lease may use terms such as ‘gross takings’, ‘gross receipts’, ‘gross income’ or similar. These mean the same as 'turnover'.

What is not considered ‘turnover’ when renegotiating rent for a protected lease?

  • JobKeeper payments received by the tenant. The business must pay these payments fully to its employees
  • Losses incurred in re-selling or disposing of merchandise reasonably and properly purchased from customers as trade-ins in the usual course of business
  • Deposits and instalments received from lay-bys, hire purchase or credit sales and that are refunded to customers
  • A refund on a transaction where the proceeds of the original transaction have been included as part of turnover
  • Any charges (service/finance/interest), payable to any financier providing customer credit (other than credit card or store card commission)
  • The price of merchandise exchanges between tenants’ shops, if the exchange is made solely for the convenient operation of tenants’ businesses and not for the purpose of concluding a sale (for example goods swapped between shops as part of a marketing campaign or stocktaking, but not related to a retail sale of those goods)
  • The price of merchandise returned to shippers, wholesalers or manufacturers
  • Proceeds from selling the fixtures and fittings of tenants’ business, after their use in the conduct of business at or from those premises
  • Discounts allowed to customers in the normal course of business
  • Uncollected credit accounts that are written off
  • The amount paid or payable as GST by tenants for the premises
  • Delivery charges
  • The amount received from selling lottery tickets or similar tickets (other than commission on sales of lottery tickets or similar tickets)
  • Revenue from online transactions, other than online transactions where:
    • the goods/services are delivered from or provided at the premises or shopping centre, related to the protected lease
    • the transaction takes place while the purchaser is at the leased premises whether or not the goods/services are delivered from or provided at the premises.

Parties must negotiate in good faith

A failure to disclose information that would impact on the negotiations is not considered good faith. After the lease has been renegotiated, if one party has failed to fully disclose their financial situation, the other party may seek to further renegotiate the agreement.

If an agreement cannot be reached, the parties may apply for mediation services under the Act.

Waiving part of the rent

Rent waivers mean that the landlord forgoes the rent entirely. The tenant does not have to:

  • pay it at a later date, or
  • accrue any debts or liabilities due to that non-payment.

Under the Code, landlords are required to offer a partial rental waiver to a tenant, that is proportionate to the tenant’s decrease in trade during the financial hardship period and subsequent recovery period.

Rental waivers should be no less than 50% of the agreed rent reduction. However, you may waive your rights to the 50% waiver if you agree to do so with the landlord.

The landlord’s financial position is also a factor in calculating a rent reduction or waiver. Landlords are not expected to forego all income as it may threaten their own financial security. It is expected that both parties negotiate acceptable terms.

Deferring the rent

Tenants will pay deferred rent in instalments, until the end of the lease or within 24 months (whichever is greater). You should also negotiate the amount and length of this repayment period with your landlord, as part of a recovery plan.

Can my landlord increase the rent?

No. From 1 April 2020, a landlord cannot increase the rent, unless agreed by the tenant, until the end of the financial hardship period. This is even if the rent was due to increase as part of a rent review defined by the agreement. The rent review may be undertaken during this period, it will not take effect until after the financial hardship period.

A rent increase deferred during the financial hardship period cannot create a debt that the tenant has to repay later.

Demonstrating financial hardship

Parties can agree between themselves about what can be used to demonstrate financial hardship.

As a guide, the following is information that most businesses should have readily available:

  • Information extracted from an accounting system
  • Information extracted from BAS
  • Information provided to a financial institution

To the extent possible the above information should be made available.

Other information that parties may agree to make available includes:

  • future cash flow projections
  • financial balance sheets, profit and loss or year-to-date statements
  • tenant’s bank balance
  • financial information that has been verified, assured, audited or provided by a third party such as an accountant
  • letter of comfort from an accountant (or similar) on financial information provided
  • financial information for periods other than the ‘relevant period’ (i.e. the period you as tenant nominate as the period for a reduction in turnover)

Reasonable recovery period

The “financial hardship period” (covered in the Act) and a “reasonable recovery period” (covered in the Code) are different periods.

The "financial hardship period" is a period of time set by the Government. During this period, special rules apply to protect lease agreements and businesses. For example, it is not permitted for a landlord to evict a tenant during this period.

A “recovery period” will take place after the end of the financial hardship period, when most of the effects of the pandemic have eased. Different businesses will need longer or shorter "recovery periods" depending on their circumstances.

Will the Government specify a “recovery period”?

No.  What is a recovery period is specific to your business and the renegotiated commercial lease.

The parties determine the duration of the rent relief when renegotiating the lease. Tenants must pay the deferred rent in instalments until either the end of the lease, or over a period of a minimum of 24 months, whichever is greater.

The renegotiated lease should provide for a gradual easing of relief, relative to the tenant’s strengthening financial position, and wider improvements to the economy.

It is not tied to when the Government ends the statutory “financial hardship period” in the Act.

Will negotiated rent relief end when the “financial hardship period” ends?

No.  The renegotiated provisions of individual leases will apply, including until:

  • the “recovery period” (as provided for in each renegotiated lease) no longer applies, or
  • the tenant's financial circumstances have recovered enough to enable them to fulfil the terms of the original lease.

Does a 'recovery period' affect the repayment of any deferred rent?

Payment of deferred rent is not the same issue as a 'recovery period'. The tenant's ability to repay deferred rent is impacted by their financial position during the recovery period.

The Code provides that:

  • care is taken to ensure that any deferred rent repayments do not compromise the tenant's ability to recover from the crisis; and
  • tenants must pay rental deferrals gradually (by instalments) over the balance of the lease term and for a period of no less than 24 months, whichever is the greater, unless otherwise agreed by the parties.

Therefore, if a landlord insists a tenant repay deferred rent immediately after the financial hardship period ends this may be contrary to the terms of the renegotiated lease agreement reached under s.18 of the Act. A reasonable recovery period has to be factored in to rent repayments.

Requirement for landlords to pass on benefits to tenants

The regulations require that landlords pass on certain benefits proportionately to tenants.

'Other benefits' that might accrue to the landlord includes waivers or remissions of rates, charges, taxes that the tenant is required to pay under the lease.

This includes statutory charges, such as land tax, council rates, or insurance premiums.

Frequency of rent re-negotiations

The minimum legal obligation to re-negotiate rent is once every three months.

However, parties are free to conduct more re-negotiations if they agree in writing that is what they both want. In doing so, they should also conduct negotiations in good faith.

Fees and charges

Can my landlord charge extra fees?

No. Landlords cannot charge fees, interest or any other charges for any rent waived or deferred.

Passing on a portion of statutory fee relief your landlord received

Your landlord may have received benefits, such as a reduction in statutory charges (for example, land tax, council rates, or insurance). Your landlord is required to pass an appropriate proportion to you, under the renegotiated terms of the lease.

Waiving fees when a tenant is unable to trade

Your landlord can waive any expenses payable by the tenant under the lease agreement, for a period that the tenant is unable to trade.

Landlords also have the right to reduce services that are provided during this time.

Can my landlord use my bond to cover money I owe?

No. Landlords cannot draw on tenants’ bond (or similar security deposit) for the non-payment of rent during the financial hardship period and a reasonable recovery period.


Can I extend the lease?

If you ask, your landlord must extend the period of the lease on similar terms until the end of the financial hardship period. This is intended to provide you with additional time to trade, on existing lease terms, during the recovery period after the COVID-19 pandemic ends.

This does not apply if the landlord:

  • has already entered into, or agreed to enter into, another lease agreement in relation to the premises
  • intends to occupy the leased premises for conducting their own business operations.


From 1 April 2020, a landlord cannot terminate a commercial protected lease agreement due to failure to:

  • pay rent, fees or charges
  • meet sales or turnover based performance criteria
  • pay outgoings
  • be open during the days or hours specified in the lease.

This prohibition applies until the end of the financial hardship period.

Mediation and dispute resolution

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

You will need to demonstrate that you have already attempted to negotiate and supplied the landlord with relevant information to assist with negotiations.

CBOS will provide 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:

A retail premises dispute cannot be mediated under both the COVID-19 Disease Emergency (Commercial Leases) Act 2020 and the Fair Trading (Code of Practice for Retail Tenancies) Regulations 1998. Mediation of a dispute over a protected lease is only allowed under the Act.

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Related information

Updated: 04 Sep 2020