The NSW COVID-19 retail and commercial leasing laws' 'prescribed period' ended on 30 June 2022. The laws themselves were automatically repealed on 14 July 2022. This has two consequences:
- looking into the future, retail and commercial tenants are no longer protected by COVID-19 tenancy laws. If breaches, including arrears, occur after 1 July 2022, landlords can enforce their rights for those breaches. This includes termination
- it becomes slightly more complicated looking backwards. Parts of the COVID-19 laws are 'saved' for some past occurrences. For arrears accrued during a 'protected period' before 1 July 2022 (i.e. before the end of the prescribed period), the tenant still has the COVID-19 leasing law protections for those arrears. The most recent protected period was from 13 January 2022 until 30 June 2022.
How the laws will work
A few scenarios illustrate how the changes apply:
- tenant A has one month's arrears from a COVID-19 protected period (say the February 2022 rent was not paid), and no arrears from 1 July 2022 onwards (outside the COVID-19 protected period). If tenant A is eligible for COVID-19 rent relief, but there has been no COVID-19 agreement or mediation, the landlord would need to mediate before terminating. If no mediated COVID-19 agreement is reached, the landlord could then terminate. (This only applies if tenant A was entitled to COVID-19 protection, such as if the tenant was an 'impacted tenant'. If not, the landlord was never restricted in enforcing for pre 1 July 2022 arrears.)
- next, tenant B has, firstly, one month's arrears from a COVID-19 protected period (say the February 2022 rent was not paid), and secondly, tenant B does not pay the August 2022 rent when it becomes due (outside the COVID-19 protected period). Regardless of whether tenant B was eligible for COVID-19 relief in March 2022, based simply on the August 2022 breach, the landlord can enforce (including terminating) for not paying the August 2022 rent. There may be an issue about whether the landlord's loss calculation needs to give some discount for any COVID-19 entitlements the tenant had, but the lease can still be terminated or enforced
- finally, tenant C has no arrears from the COVID-19 protected period but does not pay the August 2022 rent when it becomes due (outside the COVID-19 protected period). Regardless of whether tenant C was ever eligible for COVID-19 relief, based on the August 2022 breach, the landlord can enforce (including terminate) for not paying the August 2022 rent.
These scenarios give the basic application. Individual cases may raise other issues, such as if the landlord is in breach for not giving past COVID-19 relief affects the landlord's right to terminate – which will depend.
What to look out for
The following checklist may assist landlords considering their next steps:
- are there pre 1 July 2021 arrears?
- was the tenant an impacted lessee before 1 July 2022?
- are there are any post-regulation arrears (i.e. post 30 June 2022)?
- is there a documented COVID-19 relief agreement which the tenant has breached, giving the landlord an enforcement right?
With the prescribed period receding, things should slowly become less complicated.
This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.