We have previously written about the effect of the Retail Shop Leases and Other Commercial Leases (COVID-19 Emergency Response) Regulation 2020 (Regulations), and their effect on retail and commercial leases in Queensland.
Last week, the Queensland Government introduced legislation to further amend the Regulations. The amendments to the Regulations have received assent and are now in force.
The explanatory notes to the amendments state, in part:
The end of the response period and the extension period under the [Regulations] will allow a return to the ordinary commercial relations between lessors and lessees under affected leases that existed prior to the COVID-19 emergency.
In brief, the amendments to the Regulations are as follows:
- the Regulations now expire on the earlier of 30 April 2021 or another day prescribed by regulation. Previously, the Regulations were to expire on 31 December 2020.
- importantly, section 12 of the Regulations has been amended so that a lessor under an affected lease must not, during or after the response period or extension period (being 29 March 2020 to 31 December 2020), take a prescribed action on the grounds of:
- a failure to pay rent for a period occurring wholly or partly during the response period or extension period;
- a failure to pay outgoings for a period occurring wholly or partly during the response period or extension period; or
- the business carried on at the leased premises not being open for business during the hours required under the lease during the response period or extension period.
- section 14 of the Regulations has been amended so a party to an affected lease may ask another party to the lease to negotiate any or all of the rent payable during the response period or extension period. This amendment makes it clear that the request to negotiate rent only relates to rent payable during the response period or extension period. The amendments have not altered the duration of the response period (29 March 2020 to 30 September 2020) or the extension period (1 October 2020 to 31 December 2020).
- finally, section 16(2) of the Regulations has been amended slightly to again clarify that a request to negotiate a further reduction in rent applies to rent payable during the response period or the extension period.
In summary, the amendments mean that landlords will still be prevented, until 30 April 2021 (or potentially earlier), from taking a prescribed action (for example, recovering possession, terminating a lease or claiming on a bank guarantee) based on a tenant’s failure to pay rent or outgoings for a period occurring wholly or partly during the response period or extension period, or the business carried on at the leased premises not being open for business during the hours required under the lease during the response period or extension period.
Importantly, as the amendments have not changed the duration of the response period or the extension period, the Regulations will not affect the rights of landlords to take action for rental and outgoings which are payable after 31 December 2020. For that reason, we expect landlords will be closely monitoring tenants’ compliance with their lease obligations from 1 January 2021 onwards.
The explanatory notes also indicate that further transitional legislation may be passed to enable a return to normal operations once the COVID-19 related legislation is not needed. We expect any further legislation will likely be introduced closer to 30 April 2021. We will continue to monitor any amendments to the Regulations or the Retail Shop Leases Act 1994 (Qld).
The specialists in our Litigation andPropertyteams have regularly acted for both landlords and tenants under affected leases since the commencement of the Regulations. If you have any questions about actions which commercial or retail landlords can take, whether during or after the response period and the extension period, please contact us.