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News
Commercial Landlords and Tenants: Renegotiating your lease in a pandemic
August 6th, 2020
At Miller Harris, we know that local businesses are feeling the impact of COVID-19. The Commonwealth government previously announced a “code of conduct” to allow business tenants to negotiate rent relief with their landlords during the pandemic. That code of conduct did not have any legal force, but after a considerable delay, the Queensland government passed regulations to put it into effect.
There are some myths going around about what rights tenants and landlords have in the pandemic. In particular, there is no automatic right to a 50% rent discount. Read on to find out how the system works.
If a tenant requests renegotiation of the rent or conditions under the lease, parties must enter into negotiations provided that:
- the tenant has an annual turnover of less than $50 million, or is not-for-profit; and
- the tenant is eligible for the JobKeeper scheme.
The landlord and tenant must share enough information with each other to enable them to negotiate in a fair and transparent way. During the negotiations, both the landlord and tenant must cooperate and act reasonably and in good faith. At the end of the negotiations, the landlord is obliged to make an offer to the tenant. If agreement cannot be reached, or a party does not negotiate, the matter can be referred to the Small Business Ombudsman.
For affected tenants:
- Start the renegotiation process.
- Do not simply stop paying your rent or expect your landlord to stop charging rent.
- Get your business records in order so that you can demonstrate the impact of the COVID-19 measures on your business.
For affected landlords:
- Do not increase the rent payable before 1 October 2020.
- Be cautious about taking action against a tenant for failure to pay rent during this period.
- Speak with your bank about what options are available if your tenants are unable to pay the full rent.
Finally, make sure that any agreement you reach is recording in writing and that changes to the lease are reflected in formal, enforceable documentation.
If you have any questions or concerns regarding your rights and obligations you should contact our experienced commercial and property law team as soon as possible on 4092 3555, or feel free to see us in our Mareeba office at 222 Byrnes Street, Mareeba.
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