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COVID-19 regulations extended for retail and commercial leases

The COVID-19 regulatory changes for retail shop leases and commercial leases have been extended.

The Retail Shop Leases and Other Commercial Leases (COVID-19 Emergency Response) Amendment Regulation 2020 was notified on 29 September 2020.

The response period under the initial Retail Shop Leases and Other Commercial Leases (COVID-19 Emergency Response) Regulation 2020 (the regulation), made on 28 May 2020, has been extended to the period from 1 October 2020 to 31 December 2020 (the extension period).

As outlined in the Explanatory Notes, during the extension period lessors and lessees will have rights and obligations that broadly mirror the regulation as it applies in respect of the current response period, which was originally 29 March 2020 to 30 September 2020.

The regulation provides for certain protections for lessees under affected leases (the lessee protections) including that:

  • a lessor cannot take prescribed action (for example, recovery of possession, termination of the lease, eviction of the lessee) for a lessee’s failure to pay rent or outgoings or trade for specified hours during the response period
  • a lessor must not increase rent during the response period
  • any offer of rent relief must take into account certain factors such as reduction in turnover, and
  • subject to some exceptions, a lessor must offer the lessee an extension of the lease for the period that the rent has been waived or deferred.

Under the amending regulation, the lessee protections are modified to:

  • remove the requirement that 50% of the rent reduction offered be by way of waiver for the extension period
  • recognise negotiations that have already been agreed in respect of reductions in rent payable or other stated conditions of an affected lease in respect of the extension period, and
  • provide that a rent increase arising as a result of a review of rent under the lease during the response period or extension period cannot be given effect until after the end of the extension period (the modifications).

The amending regulation and the updated regulation are available on the Queensland Legislation website.

The views of practitioners are being sought on this topic. See details.

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