Changes to the COVID-19 Commercial Leasing Regulations will extend relief to tenants beyond 2020. This will have implications on the actions that landlords can take with tenants occupying their premises.
Relief for tenants continues to 3 January 2021
The COVID-19 Emergency Response (Expiry and Rent) Amendment Bill 2020 (SA) (‘Bill’) has passed by the South Australian House of Assembly. The Bill includes the COVID-19 Emergency Response (Commercial Leases No. 2) (Prescribed Period) Variation Regulations 2020 (SA) (‘Variation Regulations’).
If the Bill is passed by the Legislative Council and enacted into law the ‘Prescribed Period’ under the COVID-19 Emergency Response (Commercial Leases No.2) Regulations 2020 (SA) (‘existing regulations’) will be extended to 3 January 2021.
The extension of the Prescribed Period means the obligation on landlords and tenants to negotiate rent payable under a commercial lease in good faith will continue until 3 January 2021. Furthermore, landlords will continue to be restricted from taking certain action known as ‘prescribed action’ (such as enforcement action or calling on any security held) against any tenant deemed an ‘affected lessee’ (as defined in the regulations) until 3 January 2021.
In addition to the extension of the Prescribed Period, the Variation Regulations also stipulate that a rent relief agreement reached prior to 30 September 2020 may be subject to mediation to resolve a ‘relevant dispute’. Financial challenges continue to be faced on both sides of the commercial leasing equation with landlords facing significant rent reductions and tenants struggling to pay rent.
What happens beyond 3 January 2021?
The key question remains: what happens after the expiry of the Prescribed Period on 3 January 2021? The recent decision in the NSW Supreme Court (Sneakerboy v Georges Properties Pty Ltd (No 2)  NSWSC 1141) ruled that rent relief should continue to apply for a “subsequent recovery period” of at least 6 months. Although this decision was specific to the facts of the case, it may have implications on how a recovery period is determined in South Australia beyond the end of the Prescribed Period. It remains to be seen whether or not the State Government will implement further legislation or whether further clarity will be provided on this issue in the coming months.
If you have queries in relation to the Bill and how it may impact you, please do not hesitate to contact a member of our Property team.
This publication has been prepared for general guidance on matters of interest only and does not constitute professional legal advice. You should not act upon the information contained in this publication without obtaining specific professional legal advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication and to the extent permitted by law, Cowell Clarke does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting or refraining to act in relation on the information contained in this publication or for any decision based on it.