A Code of Conduct for Commercial Tenancies

The Queensland government has finally introduced regulations under the Covid-19 Emergency Response Act 2020 giving effect to the National Cabinet Mandatory Code of Conduct for commercial leases.

A lease is considered to be an affected lease if:

  • it is a retail shop lease or a lease for carrying on the business of the tenant;
  • it was current when the regulations commenced on 28 May 2020;
  • it is a lease of a premises where the tenant carries on business or is a non-profit body in the current financial year;
  • the tenant is a small or medium enterprise (with turnover less than $50 million for the 2018–19 financial year or likely to be under $50 million for the 2019–20 financial year);
  • the tenant is eligible for, but not necessarily enrolled in, the JobKeeper Payment scheme.

If a lease is an affected lease during the response period (that is, 29 March to 30 September 2020):

  • a tenant may not be evicted or have your lease terminated for non-payment of rent or outgoings;
  • the rent must be reduced in proportion to your lost turnover (at least 50% of the rent reduction offered must be in the form of a waiver, leaving the rest to be deferred);
  • the rent may not be increased;
  • the tenant may not be penalised for reducing trading hours or not opening;
  • the landlord may not make a claim on a bank guarantee or security deposit for unpaid rent or outgoings.

Even if the parties have already negotiated a reduction in rental payment during the response period, parties can negotiate a further reduction if circumstances have changed in a material way, for example, if the tenant’s turnover has not increased as significantly as anticipated or the income decreases substantially.

Parties need to adhere to the good faith leasing principles during negotiations and in or about dealing with disputes.

In circumstances where parties cannot reach a mutually acceptable outcome, then a party can apply for an informal mediation or undertake a dispute resolution process.

Cohen Legal is ready to assist with all aspects of leases, including negotiating fair and considered terms during the COVID-19 emergency crisis period.