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06 Apr 2020

New powers to affect ACT retail and commercial leasing in response to COVID-19

ACT landlords and tenants will need to be cautious and seek guidance on the effect of COVID-19 on their leasing, now that the ACT Government has new powers to temporarily override their lease agreements.

On 2 April 2020 the ACT Legislative Assembly passed the COVID-19 Emergency Response Act 2020 which amends the Leases (Commercial and Retail) Act 2001 and the Residential Tenancies Act 1997, allowing the Minister to make a declaration for three months (or as further extended):

  • prohibiting the termination of a lease or residential tenancy agreement;
  • prohibiting the repossession of premises;
  • changing any period under which a person must or may do something;
  • changing, limiting or preventing the exercise or enforcement of any right of a landlord;
  • exempting a tenant or class of tenant from the application of the Act;

and in relation to residential tenancies only:

  • prohibiting or limiting the matters that may be included in a residential tenancy database; and
  • modifying the Act to allow parties to agree to a temporary rent or fee reduction.

This will apply to all residential premises (except for aged care and holiday homes) and the following commercial and retail premises:

  • retail premises other than large excluded premises (greater than 1000m2);
  • shopping centres other than large excluded premises (greater than 1000m2);
  • small commercial premises (less than 300m2);
  • leases to an incorporated association;
  • leases to an unincorporated charitable entity (except for residential);
  • leases for a combination of business accommodation and secretarial services;
  • child care centres;
  • sports centres; and
  • art galleries.

It is anticipated that declarations, when made, will follow other jurisdictions and impose a moratorium on evictions for the non-payment of rent and perhaps a code of conduct for dealings between a landlord and tenant. These changes would be consistent with other recent amendments to the Residential Tenancies Act 1997 which include that, on and from 6 April 2020, a landlord must not require more than two weeks' rent to be paid in advance unless a longer period is nominated by the tenant (reduced from the previous maximum of four weeks' rent in advance).

The COVID-19 Emergency Response Bill 2020 is currently awaiting notification and the changes to the Leases (Commercial and Retail) Act 2001 and the Residential Tenancies Act 1997 will come into effect the day after notification.

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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.