Last updated: 7 December 2021

Real Estate

COVID-19 Rent & Termination Arrangements by State/Territory

With COVID-19 relief measures coming to an end in most Australian jurisdictions, commercial and residential landlords need to keep track of end dates and ensure they continue to observe transitional provisions where they still apply.

See below for the latest update on each State and Territory as at 7 December 2021.

The National Cabinet Mandatory Code of Conduct for commercial leasing was released by the Prime Minister on 7 April 2020. The purpose of the Code is to set out good faith leasing principles which will apply to commercial tenancies (retail, office and industrial).

Who does it apply to?

The Code applies to all tenancies that are suffering financial stress or hardship as a result of the COVID-19 pandemic, where the tenant is eligible for the JobKeeper programme and has an annual turnover of up to $50 million (SME Tenant).

The turnover threshold will be applied to franchises at the franchisee level and in respect of retail corporate groups at the group level (rather than the retail outlet level).

However, while not mandatory for tenancies which do not meet the JobKeeper eligibility and turnover criteria, landlords are encouraged to apply the Code to all leasing arrangements for affected businesses, having fair regard to the size and financial structure of those businesses.

How long does it apply for?

It applies from a date after 3 April 2020 (to be defined by each jurisdiction) for the period during which the JobKeeper programme is operational (i.e. until the end of the pandemic period). The JobKeeper programme is currently in place for 6 months, subject to any appropriate extension or reduction.

How will it be enforced?

The Code will be given effect through relevant state and territory legislation or regulation as appropriate. There is no detail yet regarding the timing or language of such legislation or regulation. It is possible that regulations (or declarations in some jurisdictions) will be made in relation to retail leases for the enforcement of the code of conduct for retail tenancies, but there is no comparable existing legislation for office or industrial leases and so it remains to be seen how such legislation will work.

It is also intended that there will be State- or Territory-based Industry Code Administration Committees, comprising representatives from relevant industry bodies representing landlord, tenant and SME interests, with an independent chair appointed by the relevant State or Territory Government. The role of the committee will be primarily to encourage application of the Code.

What are the principles?

The overarching principles set out in the Code include:

  • landlords and tenants share a common interest to preserve the lease and facilitate the resumption of normal trading activities;
  • landlords and tenants are required to negotiate and work towards achieving mutually satisfactory outcomes and negotiate in good faith;
  • landlords and tenants will act in an open, honest and transparent manner and provide sufficient and accurate information to enable the parties to reach agreement consistent with the Code;
  • the arrangements must be proportionate to the impact of the COVID-19 pandemic on the tenant;
  • landlords and tenants will assist each other in their respective dealings with other relevant third parties such as government, utilities and financiers in order to achieve outcomes consistent with the Code;
  • landlords must not seek to permanently mitigate their risk in relation to default in negotiating the temporary arrangements; and
  • each lease must be dealt with on a case-by-case basis having regard to the hardship suffered by the SME tenant (including any insolvency) and the terms of the lease.

What can be agreed between the landlord and the tenant?

The Code provides that the following leasing principles should be applied as soon as practicable on a case-by-case basis:

  • landlords must not terminate leases due to non-payment of rent during the COVID-19 pandemic period (or reasonable subsequent recovery period);
  • tenants must continue to comply with the lease terms, subject to any temporary arrangements agreed with the landlord. A material breach will mean that the tenant is not protected under the Code;
  • landlords must offer tenants proportionate reductions in rent payable in the form of waivers and deferrals of up to 100% of the rent ordinarily payable, on a case-by-case basis, based on the reduction in the tenant's trade for the pandemic period and a subsequent recovery period;
  • rental waivers must constitute no less than 50% of the total reduction in rent and may be greater where necessary to allow the tenant to fulfil its ongoing obligations, but regard must also be had to the landlord's financial ability to provide such waivers. Tenants may waive the 50% minimum waiver requirement;
  • any remaining relief may be in the form of a waiver or a deferral;
  • deferred rent must be paid over the balance of the lease term, but if the balance of the lease term is less than 24 months, then the tenant may pay the deferred rent over a 24 month period, commencing after the end of the pandemic period (i.e. deferred rent could continue to be paid after the lease expiry);
  • any reduction in statutory charges or insurance costs incurred by the landlord will be passed on to the tenant in the appropriate proportion under the terms of the lease;
  • if the landlord receives any benefit due to the deferral of loan payments by its financier, the landlord should seek to share that benefit with the tenant in a proportionate manner;
  • landlords should seek to waive recovery of any other expense (such as cleaning costs or marketing levies) or outgoings payable by a tenant during the period the tenant is not trading and landlords may reduce services provided to the premises in these circumstances;
  • if the agreement between the landlord and tenant requires any repayments, then the repayment should be made over an extended period of time and should not commence until the earlier of the end of pandemic period or existing lease expiry, and taking into account a reasonable recovery period;
  • no fees or other charges should accrue on waived or deferred rent;
  • no interest is payable on waived rent although interest may accrue on deferred rent provided it is not punitive;
  • landlords must not draw on a tenant's security for the non-payment of rent during pandemic period or a reasonable recovery period;
  • tenants should be given the option to extend their lease term for a period equivalent of the rent waiver and/or deferral period;
  • landlords will not apply rent increases (except for retail leases based on turnover rent) during the pandemic period; and
  • tenants will not be in breach of the lease if they reduce opening hours or cease to trade during the pandemic period.

These principles offer a starting point for landlords and tenants when seeking to negotiate rent relief due to COVID-19. While they are binding on leases with SME Tenants, they also provide good guidance for landlords seeking to provide relief and for other commercial tenants experiencing hardship.

What if no agreement is reached?

If landlords and tenants cannot reach agreement, the matter may be referred by either party to applicable leasing dispute resolution processes for binding mediation. It is unclear what will happen if the parties cannot reach agreement at mediation; presumably there will be a right to escalate the matter through the relevant Courts and tribunals. Alternatively, the "binding mediation" may take the form of an arbitration where the arbiter determines the resolution without a further escalation regime.

Landlords and tenants must not use mediation to prolong or frustrate the process.

How will it work in practice?

It is intended that landlords will agree bespoke, temporary agreements with each SME Tenant documenting the rent relief and which takes into account the particular circumstances on a case-by-case basis.

Landlords and tenants who are not bound by the Code can use the principles set out in the Code as a framework for agreeing and documenting any relief which may be necessary and appropriate for those leases.

To demonstrate hardship, tenants will need to provide "sufficient and accurate information", which, as specified in the Code, includes information generated from an accounting system and information provided to and/or received from a financial institution. See here for a suggested list of the sorts of information which tenants may be required to provide.

Case study

The tenant has experienced a 60% reduction in turnover since 1 March, attributable to COVID-19. The tenant's usual turnover is less than $50 million. The lease is therefore subject to the mandatory code. The tenant seeks rent relief from the landlord and provides relevant information to support its position.

In accordance with the Code, the landlord and the tenant agree:

  • 30% waiver of rent during the pandemic period;
  • 30% deferred rent to be repaid over the remaining three years of the lease term;
  • tenant will continue to pay 40% of the rent during the pandemic period;
  • the landlord will not terminate the lease due to non-payment of rent or call on the bank guarantee; and
  • a fixed rent increase which was scheduled to take place on 1 May will not occur.

This agreement complies with the Code because:

  • the total cash flow relief is proportionate to the loss in turnover;
  • half the rent relief is in the form of a rent waiver with the remainder as a rent deferral;
  • there is a moratorium on termination and calling on security during the pandemic period; and
  • the scheduled rent review during the pandemic period will not take place.

What is the difference between a waiver and a deferral?

A waiver means the amount of rent payable is waived and may not be recouped by the landlord at a later time. A failure to pay the waived rent will not be a breach by the tenant.

A deferral means the amount of rent payable is deferred and must be paid by the tenant at a later time. A failure to pay the deferred rent at the later time would be a breach by the tenant.

What next?

We will need to see the terms of the relevant State- and Territory-based legislation to understand the full implications of the Code. However, the Code will enable parties to commence negotiating appropriate rent relief in line with the principles set out in the Code.

See here for the types of matters which parties could consider including in their agreements.

Current at: 14 December 2021

Commercial tenancies

On 31 August 2021, the Leases (Commercial and Retail) COVID -19 Emergency Response Declaration 2021 was declared. The Declaration came into effect on 2 September 2021 and is being revoked on 1 January 2022.

The Declaration re-introduces the terms of the previous ACT COVID-19 declarations, including:

  • placing an obligation on a landlord to negotiate in good faith with an impacted tenant that has committed a breach under a lease;
  • placing an obligation on landlords and tenants to have regard to the leasing principles contained in the National Cabinet Mandatory Code of Conduct; and
  • preventing a landlord from issuing a termination notice or taking action to evict the Tenant or exercising a right of re-entry unless the parties have first engaged in good faith negotiations.

Owners of commercial property may apply for support if between 1 August 2021 and 31 September 2021 they reduce rent for a commercial tenant impacted by COVID-19 or have a business operating on land impacted by COVID-19.

Residential tenancies

On 31 August 2021, the Residential Tenancies (COVID-19 Emergency Response) Declaration 2021 (No 3) was declared.

Landlords cannot evict COVID-19 impacted tenants who accrued rental arrears during or prior to moratorium on evictions (for a period of 12 weeks from 1 September 2021 unless extended). A transitional period will run for a further 12 weeks after the moratorium ends to allow COVID-19 impacted tenants more time to clear any rental debt.

COVID-19 impacted tenants may terminate their fixed-term tenancy agreements early without penalty by providing a landlord with 3 weeks' notice. During the transitional period, ACAT will be required to consider making a payment order as an alternative to making a termination and possession order where the tenant was from an impacted household.

Eligible landlords who reduced the rent by at least 25% in a residential property they let between 1 August and 30 September 2021 may receive a land tax credit to cover 50% of the rental reduction (capped at $100 per week) for the property.

For more details see:

Current at: 7 December 2021

Commercial tenancies

The rent relief principles set out in the National Cabinet Mandatory Code of Conduct (Code) were reintroduced in August 2021 and will continue until 13 January 2022.

From 13 July 2021 until 13 January 2022 (prescribed period), an "impacted lessee" may make a request for rent relief by providing evidence of their eligibility to their landlord.

From 13 July until 30 November 2021, an impacted lessee is a tenant who:

  • qualifies for either the 2021 COVID-19 Micro-business Grant, 2021 COVID-19 Business Grant or 2021 Jobsaver Payment; and
  • had a turnover of less than $50 million in the 2020-2021 financial year.

From 1 December until 13 January 2022, the 'impacted lessee' criteria changes with the turnover threshold significantly lowering so as to apply to smaller tenants only. From 1 December 2021, an impacted lessee is:

  • a tenant who would have qualified for either the 2021 COVID-19 Micro-business Grant or the 2021 Jobsaver Payment if still available; and
  • had a turnover of less than $5 million in the 2020-2021 financial year.

When assessing the amount of turnover or the 2020-2021 financial year, the Regulations make the following differentiations:

  • if the lessee is a franchisee, only the turnover of the business conducted at the premises is relevant;
  • if the lessee is a corporation that is a member of the group of related body corporates (as defined in the Corporations Act 2001), the turnover of the whole group of companies is relevant;
  • in any other case, the turnover of the business conducted by the lessee is relevant; and
  • turnover of a business includes income derived from internet sales of goods and services.

Any previous rent relief arrangements are not automatically extended, unless the parties agree an extension. Any new request for rent relief must cover a different time period than any previous rent relief.

During the prescribed period:

  • If a tenant demonstrates they are a 'impacted lessee', the parties must commence renegotiations of the rent on a good faith basis in accordance with the Code within 14 days of the request being made. The rental relief must be proportionate to the impacted lessee's decline in turnover, with at least 50% of the relief being in the form of a waiver, and the balance of the relief to be a deferral in the payment of rent.
  • A landlord is prohibited from increasing the rent under an impacted lease.
  • A landlord is prohibited from taking a 'prescribed action' in respect to any breach arising from failure to pay rent, outgoings or failing to open for business.
  • The parties are required to mediate before the landlord may take any enforcement action for a prescribed breach.

A landlord is not required to reduce rent for periods when the tenant is not an 'impacted lessee' and any negotiated rent reduction that has been agreed will not apply if the tenant ceases to be an 'impacted lessee' (Regulation 6D(4A)). From 1 December 2021, the lower turnover threshold of $5m applies meaning a large number of previously negotiated rent reductions may cease to apply as a result of the threshold change.

Repeal and Saving Provision: The Retail and Other Commercial Leases (COVID-19) Regulation 2021 and Schedule 5 of the Conveyancing (General) Regulation 2018 will be repealed on 14 January 2022. A saving provision has however been passed so that Schedule 5 of the Conveyancing (General) Regulation 2018 will continue to apply, despite its repeal, to anything occurring in relation to a lease prior to 14 January 2022 while the lease was an 'impacted lessee' within the meaning of the Schedule. This means that despite the Regulations' repeal, tenants will still be able to claim relief and/or receive the benefit of the protections against a 'prescribed breach' provided they can demonstrate they were an 'impacted lessee' prior to 14 January 2022.

Land tax and other relief: Landlords who provide impacted lessees with rental relief in accordance with the Code are entitled to a concession on the land tax payable on the premises for 2021.

The land tax reduction will be the lesser of:

  • the amount of rent reduction provided to an eligible tenant for any period between 1 July 2021 and 31 December 2021, or
  • 100% of the land tax attributable to the parcel of land leased to that tenant.

Applications for land tax relief can be made through the Service NSW website.

The New South Wales Government has also established a $40 million hardship fund for small commercial and retail landlords. Eligible landlords who provide rental waivers of up to $3,000 a month will be entitled to a monthly grant of up to $3,000 to match the rental waiver provided to impacted lessees. However landlords who have claimed land tax relief between 1 July 2021 and 31 December 2021 are not eligible to apply for a grant under the fund.

Landlords may also continue to take enforcement action on grounds unrelated to economic impacts of COVID-19 (e.g. for damage to a premises).

Residential tenancies

The moratorium on eviction of residential tenants for rental arrears ended on 11 November 2021.

However, from 12 November 2021 until 12 February 2022, COVID-19 impacted tenants who accrued arrears during the moratorium period (14 July 2021 to 11 November 2021) are exempt from provisions that would allow them to be evicted for those arrears unless:

  • if the landlord and tenant have agreed to an arrears repayment plan, the tenant fails to make repayments in accordance with that plan on two or more consecutive occasions and it is otherwise fair and reasonable in the circumstances for the tenant not to be exempt; or
  • if the landlord and tenant have not agreed to a repayment plan, but have attempted to do so with NSW Fair Trading, it is otherwise fair and reasonable in the circumstances for the tenant not to be exempt.

The Tribunal must have regard to a number of factors when deciding whether it is fair and reasonable in the circumstances for the tenant not to be exempt from the operation of a provision. These include, but are not limited to, the steps taken by the parties to negotiate, the extent of payments the tenant has made, the nature of the financial hardship, the availability of alternative accommodation, any special vulnerability of the tenant and whether the landlord has sought other relief, e.g. financial assistance or land tax relief.

Land tax other relief: Landlords who have reduced the rent payable by an impacted tenant from 14 July 2021 may also be eligible for a payment of up to $4,500 under the NSW Government's Residential Tenancy Support Package. Prior to 11 November 2021, only landlords could initiate this application but since that date, impacted tenants can also apply (on the understanding that payments will be made into the landlord's account or the agent's trust account). Landlords can apply either for the Residential Tenancy Support Payment or COVID-19 land tax relief but not both. Tenants will need to show a reduction in household income by 25% or more due to COVID-19 compared to the 4 weeks prior to 26 June 2021. Applications close on 31 December 2021.


Current at: 7 December 2021

Commercial tenancies

The emergency period under the Tenancies Legislation Amendment Act 2020 (NT) has been extended pursuant to the Minister for Health's extension of the "emergency period" until 18 March 2022.

Landlords are still required to negotiate in good faith with the tenant to allow the tenant to remain in the leased premises before issuing a notice to quit.

Residential tenancies

The relief measures under the Residential Tenancies Act 1999, pursuant to the Modification Notice, continue to apply until the end of the "emergency period", being 18 March 2022.

Current at: 7 December 2021

Commercial tenancies

Although the original relief period for commercial tenancies ended on 31 December 2020:

  • rights and obligations that accrued during that period are preserved until 30 April 2022; and
  • the temporary dispute resolution process established under the Regulations can continue to operate (for lease disputes that were not concluded before 31 December 2021) until 30 April 2022.

Residential tenancies

Most measures prescribed by the Residential Tenancies and Rooming Accommodation (COVID-19 Emergency Response) Regulation 2020 ended on 29 September 2020, however certain provisions are retained until 30 April 2022 including protections for tenants experiencing domestic or family violence and limiting re-letting costs for eligible tenants who end their fixed term tenancy early.

Current at: 7 December 2021

Commercial tenancies

Rent relief measures expired on 3 January 2021. Any breach of the terms of a lease from 4 January 2021 can be dealt with by way of a breach notice and normal enforcement measures, including eviction.

Residential tenancies

The emergency relief granted by the COVID-19 Emergency Response Act 2020 (SA) was extended by the COVID-19 Emergency Response (Expiry)(No 3) Amendment Act 2021. Rental relief expired 1 December 2021, being the date which was the earlier of 1 December 2021 and the day which is 28 days after all relevant declarations relating to the outbreak of COVID-19 within South Australia have ceased. Clause 20 of the Act remains in effect, permitting the Governor to make future regulations of a savings or transitional nature.

Current at: 7 December 2021

Commercial tenancies

The Financial Hardship Period during which certain actions in relation to protected commercial tenancies were prohibited ended on 31 January 2021.

Landlords are no longer banned from enforcing rent increases or taking other prohibited actions in relation to a protected lease on the grounds of a relevant breach of the lease. Unless otherwise agreed, tenants must pay any rent that was deferred during the Financial Hardship Period in negotiated instalments over the remaining term of the lease, or over a period of no less than 24 months, whichever is greater.

Residential tenancies

The emergency period in relation to residential tenancies, and the changes made to the Residential Tenancy Act 1997 in relation to rental evictions, rental increases and general repairs and maintenance, also expired on 31 January 2021. Further changes to the Residential Tenancy Act 1997 allow the Residential Tenancy Commissioner to issue a rent arrears payment order on the application of a tenant which will allow landlords to recover any remaining rental arrears that accrued during the emergency period. Such an order does not override the obligation of a tenant to make regular payments of rent, but instead outlines a schedule for repayments in addition to the tenant's normal rent obligations, and protects the tenant from eviction whilst they are complying with the order.

The COVID-19 Rent Relief Scheme and COVID-19 Extra Support Scheme, both of which provided rent relief and extra support payments for tenants experiencing financial hardship as a result of the COVID-19 pandemic, and the COVID-19 Landlord Support Scheme which provided financial support to landlords who were experiencing financial hardship due to tenants being behind in rent, all ceased with effect from 30 June 2021.

Current at: 7 December 2021

Commercial tenancies

The Victorian Commercial Tenancy Relief Scheme was re-introduced in August 2021, with some changes from the 2020 Scheme. Provided the tenant sent their request for relief and supporting documentation to the landlord on or before 30 September 2021, relief under the Scheme applies retroactively from 28 July 2021. Otherwise, relief only applies on and from the date of the tenant's request. The Scheme will expire on 15 January 2022. There is a freeze on rent increases and evictions for not paying rent until 15 January 2022 where the tenant is eligible and has made a compliant rent relief request to their landlord.

Other relief: The Victorian Government has established the Commercial Landlord Hardship Fund 3, providing grants of up to $6,000 per eligible tenancy to assist eligible small landlords who experience hardship as a result of waiving rent for their tenants between 28 July 2021 and 15 January 2022 under the Commercial Tenancy Relief Scheme. The grant increases to a maximum of $10,000 per tenancy for small landlords in acute hardship. To be considered for 'acute hardship', landlords must have waived more than $6,000 in rent between 28 July 2021 and 15 January 2022, and confirm that commercial rent represented at least 70% of their total gross annual income for the 2019-2020 financial year.

Land tax relief: Landlords of single tenanted properties who provide rent relief to their eligible tenants between 28 July 2021 and 15 January 2022 under the Commercial Tenancy Relief Scheme and commercial owner-occupiers are eligible for a 2021 land tax reduction of 25%. Landlords of multiple tenanted properties who provide rent relief to their eligible tenants between 28 July 2021 and 15 January 2022 are eligible for a reduction of up to 25%, the reduction being limited to the total amount of rent waived. In each case, the relief is in addition to any previous land tax relief but exclusive of any absentee owner surcharge. All eligible landlords will also be able to defer any remaining 2021 land tax (and any remaining 2020 land tax that was previously deferred under the 2020 relief measures) until 31 May 2022. In each case, applications close on 30 April 2022.

For more details see:

Residential tenancies

Following the end of the previous residential rent relief grants program on 28 March 2021, the Victorian Government announced COVID-19 Rental Relief Grant Round 2, providing one-off residential rent relief grants of up to $1,500 to assist renters who continue to experience hardship due to the COVID-19 pandemic after 27 May 2021. Round 2 applications will close on 16 January 2022.

A grant must be used to contribute towards the cost of rent of a primary residence and the payment of the grant will be made directly to the landlord or the landlord's agent. Landlords are required to negotiate rent reductions in good faith and the grant is to be used to pay the agreed reduced rent (and not to make up the difference between the previous rent and the reduced rent).

To be eligible for a grant, a tenant must:

  • enter into a rent reduction agreement with their landlord for a period after 27 May 2021;
  • be paying more than 30% of their income in rent after the rent reduction;
  • have lost income on or after 27 May 2021 as a result of the pandemic;
  • have an income of less than $62,860 pa (or $1,208.85 per week) for singles, or less than $94,300 pa (or $1,813.46 per week) for couples; and
  • have less than $2,000 in savings (excluding superannuation).

There are no citizenship or permanent residency eligibility criteria. Casual workers on holiday and working visas, international students, skilled visa holders, seasonal workers, New Zealand citizens, and refugee and temporary protection visa holders are eligible for the new grants.

The amount of a grant will be calculated according to the tenant's income and the level of reduced rent.

Further details can be found at:

Applications for a rent relief grant may be lodged online through the Department of Families, Fairness and Housing at:

Current at: 7 December 2021

Commercial tenancies

There are no current Covid-19 related relief measures for commercial tenants in WA.

The "emergency period" under WA's Commercial Tenancies (COVID-19 Response) Act 2020 has expired.

The moratorium on evictions, freeze on rent increases and obligations to give rent relief no longer apply.

Residential tenancies

There are no current Covid-19 related relief measures for residential tenants in WA.

The "emergency period" under the Residential Tenancies (COVID-19) Response Act 2020 has expired. Variation of rent and termination of residential tenancies will continue to be governed by the Residential Tenancies Act 1987 (WA).

Frustration of leases

In response to the current pandemic, the Australian Government mandated closure of certain businesses including cinemas, theatres, pubs, galleries, museums, beauty parlours and salons, gyms and other "non-essential" industries. In the absence of an express right under a lease (for example a clause allowing for rent abatement or a force majeure clause), landlords and tenants alike are turning their minds to whether their lease can be frustrated if the tenant is unable to trade or use the property for the purpose intended, and permitted, under the lease.

In general, the common law doctrine of frustration brings a contract to an end where, through no fault of the parties, a post-contract event has either made contractual obligations impossible to perform or it fundamentally transforms an obligation into a radically different obligation.

Can a lease be frustrated?

The history of frustration and its applicability to leases is complicated: frustration has proven difficult to establish and is relatively narrow in scope. Whether a lease can be frustrated depends on the nature of the business, and the purpose of the business' use of the premises.

Case law indicates however that a temporary or transient change generally will not be sufficient to frustrate a lease. Courts have also been reluctant to take hardship into consideration. Although the applicability of frustration to leases remains relatively untested in Australian case law, it is an area which is likely to see significant development if forced closures become protracted.

The onus of proving that the lease has been frustrated clearly rests with the party (landlord or tenant) seeking to excuse themselves from performance under the lease.

Closure, partial trading and working from home

We are increasingly seeing arguments for frustration where a business has been forced into circumstances of partial trading. A situation where this may arise could be a restaurant which has been mandated to close its doors to patrons, but still offers take-away from the premises.

An argument for frustration in the case of a partial rather than a total shutdown of the provision of goods and services is relatively weaker. In the case of a restaurant for example, the provision of food to customers, whether this is by means of take-away rather than dine-in services, is not a fundamentally different obligation or impossible to perform.

In general, if a business continues or is able to continue to use the premises, and/or is operating from the premises, then a successful argument for frustration is highly improbable.

We are also seeing many businesses continuing to operate while encouraging their employees to work remotely. The physical workplaces of many private offices, including legal firms for example, are closed as a result of COVID-19, however many of these businesses continue to provide services to their clients with their employees working from home. Despite the physical premises being unable to be used, there is evidently no frustration of the lease as the business continues to operate.

For tenants

As a tenant seeking to rely on the doctrine of frustration, you should first assess your business's ability to operate from the premises and whether or not you are still able to sell goods or provide your services by alternative means. If you are still operating, or are able to operate, all or part of your business, or if you are still advertising your services, then it is unlikely you will be able to claim frustration of your lease. Tenants in this situation still have an obligation to pay rent as well as any other monies due and payable under the lease (unless an express provision in the lease or Government intervention determines otherwise).

If the tenant can no longer operate its business from the premises, for example a cinema, the tenant would be in a stronger position to claim that the lease is frustrated. This too will depend on the length of the mandatory closure.

For landlords

As a landlord with a tenant claiming the lease is frustrated, you should consider if the tenant's business relies solely on operating from the premises or if the business can still operate, albeit partially, with employees working remotely or with reduced services.

What are the consequences of frustration?

If frustration does apply, the lease will be automatically terminated at law upon the occurrence of the frustrating event.

In the ACT, Northern Territory, Queensland, Tasmania and Western Australia where the common law applies, the obligations of all parties under the lease will cease. This includes the payment of rent and outgoings (if any). New South Wales, South Australia and Victoria all have legislation outlining the process.

Lease termination may result in harsh financial impacts on both the tenant and the landlord, and parties should review their financial and economic situations, including in relation to insurance, in case such a situation arises.