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The NSW COVID-19 leasing regulations have been extended until 28 March 2021, albeit with some qualifications.

The Retail and Other Commercial Leases (COVID-19) Regulation (No. 3) 2020 (NSW) (Regulation) commenced on 1 January 2021. The effect of the Regulation is to extend the “prescribed period” to 28 March 2021.

Amongst other things:

  • a landlord under an “impacted lease” cannot take any “prescribed action” against an “impacted lessee” (such as eviction, termination of the lease, or calling on any security provided by the tenant) due to non-payment of rent or outgoings during the “prescribed period
  • an impacted lessee has the right to re-negotiate their rent payable under an impacted lease, and the rent cannot be increased during the prescribed period (unless it is rent determined by reference to turnover)

However, the new Regulation has significantly narrowed the scope of these protections for tenants as:

  • the Regulation only applies to retail leases and not commercial leases – previous versions of the regulation applied to both
  • to qualify as an “impacted lessee”, the tenant must be eligible for Jobkeeper after 4 January 2021 (when new eligibility rules for Jobkeeper commence) and the tenant’s
  • turnover (including corporate group turnover) for the 2018-19 financial year must be less than $5 million (previously this was $50 million)

The Regulation is not due to be repealed until 1 June 2021, leaving the door open for possible further extensions to the “prescribed period” depending on the state of the economy.

Action Item

Landlords and tenants should carefully review the new Regulation to determine whether it applies to their existing leases and ensure they comply with its terms as any non-compliance may have serious adverse consequences.