COVID-19 Commercial leasing update

COVID-19 financial hardship period

The financial hardship period was intended by the Tasmanian Government to terminate at the end of March 2021 (i.e. 12 months after the commencement of the financial hardship period on 1 April 2020).

However, due to the drafting of the legislation and its delayed commencement on 3 June 2020, the financial hardship period will end on 2 June 2021 and is approximately 14 months.

The Tasmanian Government has not yet corrected the information on its CBOS website, click here, which currently refers to an end date of 30 September 2020, however, this is being followed up.

COVID-19 Disease Emergency (Commercial Leases) Act 2020

Section 17 of the COVID-19 Disease Emergency (Commercial Leases) Act 2020 commenced on 24 July 2020.

This section effectively provides for a ‘rental freeze” during the financial hardship period (no market, CPI or fixed rent reviews) except as provided in the Regulations and except where otherwise expressly agreed by the Landlord and Tenant.

COVID-19 Regulations

The COVID-19 Disease Emergency (Commercial Leases) Regulations 2020 commenced on 20 July 2020.

The effect of the Regulations is to:

  • establish that turnover rent is not the subject of the “rental freeze” provisions under section 17 of the COVID-19 Disease Emergency (Commercial Leases) Act 2020;
  • limit the frequency of the obligation to renegotiate rent payable under section 18 of the COVID-19 Disease Emergency (Commercial Leases) Act 2020; and
  • reduce statutory outgoings which are payable by a Tenant as a fixed charge in proportion to the reduction in amount payable by the Landlord for those statutory outgoings.

If you have any queries or would like any further information about this article, please contact:

David Shelley
Managing Principal
M: 0427 183 217
E: dshelley@pageseager.com.au

Daniel Morgan
Principal
M: 0438 436 968
E: dmorgan@pageseager.com.au

Published: 5 August 2020

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