In September 2021, the ACT Government released new COVID-19 response measures relating to retail and commercial leases.
The measures are a result of the ACT Legislative Assembly implementing the Leases (Commercial and Retail) Emergency Response Declaration 2021 (“the Declaration”), which incorporates the principals of the National Cabinet Mandatory Code of Conduct (“the Code”), to provide temporary protections for commercial landlords and tenants who have entered into a lease prior to 12 August 2021.
The Declaration was made on 2 September 2021, however it takes effect retrospectively to cover tenants who have experienced financial difficulties from 12 August 2021, and will continue until it is declared the end of the ACT COVID-19 emergency (“Prescribed Period”).
The Declaration applies to tenants:
- that are small to medium enterprises (SME) with an annual turnover of less than $50 million in the 2020-21 financial year; and
- which have experienced a decrease in turnover of at least 30% in any given month within the Prescribed Period.
The Declaration provides that in light of the leasing principals in the Code and the impacts of the COVID-19 pandemic, landlords must negotiate with impacted tenants in good faith before taking action against an impacted tenant who has committed a prescribed breach of the lease within the Prescribed Period.
For tenants who are unable to negotiate an agreeable position, the ACT Government is suggesting tenants and landlords take their matter to the COVID-19 Local Business Commissioner, Mr Brendan Smyth, for guidance toward resolution. Mr Smyth can work with you to assess your issues and refer you to free mediation to assist in renegotiating commercial leasing arrangements. You can also contact Griffin Legal for advice.
Some documents the ACT Government has suggested tenants should prepare in anticipation of their landlord requesting assurance that their business is an SME and meets the test for decline in turnover includes a combination of:
- extracts of accounting records;
- business activity statements;
- bank statements of the business accounts; and
- a statement prepared by a practising accountant.
Assistance for Landlords
As far as assistance for Landlord’s is concerned, the ACT Government is providing assistance to eligible commercial landlords who provide rental relief to impacted tenants who meet the criteria above, in the form of a rates credit of 50% of the total rent reduction they provide, up to a $5,000 cap. These credits are based on rent reductions provided between 1 August 2021 and 30 September 2021, and will be provided on one quarterly rates bill.
You can find more information in relation to the Declaration on the ACT Government Business Hub by clicking this link.
Please contact us if you think you may be eligible to support under the Declaration and would like to provide specific advice on the options applicable to your circumstances.