ACT reintroduces relief for commercial and retail tenancies

By the ACT Real Estate team
02 Sep 2021

The ACT Legislative Assembly has reintroduced its COVID-19 related instrument affording relief to commercial and retail tenants affected by COVID-19 through the Leases (Commercial and Retail) COVID-19 Emergency Response Declaration 2021.

Leases (Commercial and Retail) COVID-19 Emergency Response Declaration 2021

On 31 August 2021, the Leases (Commercial and Retail) COVID-19 Emergency Response Declaration 2021 was declared. The Declaration comes into effect on 2 September 2021 and unlike previous declarations which had a fixed end date, will expire on:

  • the first day no COVID-19 emergency is in force; or
  • a later day notified by the Minister.

This appears to take into account the current uncertainty on when the ACT will come out of lockdown.

The Declaration reintroduces the terms of the previous 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 (such as eviction of the tenant, exercising a right of re-entry or seeking damages) unless the landlord has first engaged in good faith negotiations with the impacted tenant.

The key difference from the previous COVID-19 declarations is that the JobKeeper program has concluded and so cannot be used to determine a tenant's financial hardship. Instead, the Declaration applies to an "impacted tenant" who:

  • has suffered financial stress or hardship due to COVID-19, being a 30% decline in the tenant’s turnover for any month during the Declaration period (by reference to a comparison month in 2019 or 2020) or where they are a not-for-profit, a 15% decline in turnover; and
  • has an overall turnover of less than $50 million for the 2020-21 financial year,

with the decline in turnover determined by reference to a comparison month in 2019 or 2020.

The Declaration is limited to breaches committed from 12 August 2021 until the Declaration expires. However, the provisions of the previous COVID-19 declarations continue to apply to prescribed breaches during those declarations periods. The Declaration does not apply to lease agreements entered into from 12 August 2021.

Rates (Commercial Land) Exemption

The previous rates exemptions for commercial land have not as yet been reintroduced, with relief instead being provided to eligible businesses through the ACT COVID-19 Business Support Grants, a program jointly funded by the ACT and Australian Governments.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.