In March 2020 the WA government introduced a code of conduct to support tenants of commercial properties with COVID rent relief.
This code of conduct was created to ensure businesses survived the economic downturn by assisting commercial tenants and landlords to negotiate a rent relief agreement. The code applied to small businesses with an annual turnover of up to $50 million and that were also eligible for the JobKeeper scheme.
The code allowed tenants who were affected by the pandemic to request rent relief from landlords, who were required to:
- offer relief at least proportionate to the reduction in turnover that the business had suffered; and
- waive at least half of that rent, with the balance either being deferred or waived.
Further, rent could not be increased and tenants could not be evicted for not meeting their rent obligations.
These COVID rent relief rules were initially intended to end on 30th September 2020, but as a result of the continued economic effects of the pandemic, the rules were extended until 28th March 2021. Not every tenant qualified for the extension – if, after 30th September 2020, a tenant’s business improved to a point where they were no longer eligible for the JobKeeper scheme, the code no longer applied and no further rent relief was available.
Now that 28th March 2021 is fast approaching, the rent relief provided to the remaining eligible tenants will no longer apply. What will this mean?
- Rent obligations that were previously deferred will need to be paid back. Deferred rent will need to be paid over a 24 month period or the balance of the lease term (whichever is greater).
- Landlords can take legal action if deferred rent is not paid by the tenants as per the agreement.
- Landlords are permitted to take action to terminate or evict tenants if rent is unpaid..
- Landlords can start applying rent increases.
If you are experiencing difficulties with your landlord or tenant, the Department of Commerce recommends you contact the Small Business Development Corporation for advice.
For further information, please visit https://www.commerce.wa.gov.au/consumer-protection/commercial-tenancies-covid-19-response