Last updated: 29 March 2021
Commercial tenancy COVID-19 protections are coming to an end. Here is a summary of important changes for commercial tenants and landlords.
Key changes you need to know about
In April 2020, the WA Government passed a law to help commercial tenants and landlords reach agreement about rent during the COVID-19 pandemic. The law, designed to help businesses survive economic downturn, has two parts:
- Commercial Tenancies (COVID-19 Response) Act 2020
- WA code of conduct
The law initially covered the emergency period 30 March to 29 September 2020. This period was extended until 28 March 2021, and the temporary commercial tenancy laws continued to apply with some changes.
End of emergency extension period
An extension to the period in which parties can resolve a claim for rent relief has been approved. Applications for assistance with dispute resolution relating to the period 30 March 2020 – 28 March 2021, can be made until 27 May 2021.
On 28 March 2021, the emergency period for commercial tenancy support ends. This means that the protections introduced under the Commercial Tenancies (COVID-19 Response) Act 2020 (CTCR Act) and the associated WA code of conduct will also end, unless you are already in a formal dispute process. At this point, normal commercial tenancy laws under the Commercial Tenancy (Retail Shops) Agreements Act 1985 will continue.
However, parties to a small commercial lease in dispute for matters related to the CTCR Act and the associated WA code of conduct arising through to 28 March 2021 can apply to the Small Business Commissioner or the State Administrative Tribunal (SAT) for dispute resolution up to 27 May 2021.
What you need to know
If you are a tenant with a small commercial lease that was covered by the CTCR Act, you need to be prepared for key changes after 28 March 2021.
From this time:
- Landlords can take action in relation to defaults (such as non-payment of rent) that occur after 28 March 2021
- Landlords can take action for non-payment of rent that occurred during the emergency period 30 March 2020 – 28 March 2021, unless it is the subject of an ongoing dispute being assisted by the Small Business Commissioner or has proceeded to the SAT.
- Landlords no longer need to provide rent relief, so if you have received rent relief, you may now need to recommence paying your rent in full.
- You must also start paying back any rent that was deferred during the emergency period, based on the method of repayment agreed with your landlord. You have a minimum of 24 months or the balance of your lease term (whichever is longer) to pay back the deferred rent.
- If your lease ended before 28 March 2021, you need to start paying back deferred rent from the time your lease ended.
- Landlords may also increase your rent (whether or not you have received any rent relief) in accordance with the terms of your lease.
Seeking assistance under Commercial Tenancy COVID Protections
If you are a landlord or tenant who has not yet resolved a commercial tenancy matter related to the CTCR Act or WA code of conduct, such as a request for rent relief, you must act now to gain access to the protections under the legislation.
It is important to note that negotiations about commercial tenancy matters related to COVID support must either:
- have been finalised in the form of a written variation to a lease
- be the subject of an ongoing dispute assisted by the Small Business Commissioner, or
- have proceeded to the SAT
by 11.59pm on 27 May 2021 in order to retain rights under the CTCR Act. This includes whether:
- You are an eligible tenant in a small commercial lease that wishes to request rent relief from your landlord for any period between 30 March 2020 and 28 March 2021, and you have not yet followed the process outlined in the WA code of conduct. This includes writing to your landlord to request rent relief and allowing them 14 days to respond.
- You have followed the processes outlined in the WA code of conduct including making a request in writing for rent relief during the emergency period; provided sufficient and accurate information about your eligibility and the reduction in turnover experienced during the emergency period; and not yet come to a resolution about rent relief.
An eligible tenant is a tenant under a small commercial lease that:
• has an annual turnover of less than $50 million, and
• is eligible for the JobKeeper scheme or can show the same loss in turnover (30 per cent for a business or 15 per cent for a not-for-profit).
A small commercial lease includes:
• a retail shop lease [as defined in the Commercial Tenancy (Retail Shops) Agreements Act 1985] - see our fact sheet summarising retail lease changes
• a lease where the tenant is a small business
• a lease where the tenant is an incorporated association, and
• a lease for a commercial purpose to an Aboriginal and Torres Strait Islander corporation.
What to do
The SBDC can provide assistance to help you reach an agreement on the commercial tenancy matters covered by the COVID provisions. This service is available to both tenants and landlords:
- Contact our business advisory service on 133 140 and detail your situation.
- Our business advisers will check your eligibility and guide you on following the process outlined in the WA code of conduct, if you haven’t already done so.
- Once it is established that you have followed the negotiation process and a resolution has not been reached, our advisers will escalate the matter to the SBDC’s dispute resolution service (DRS) and you will be contacted by a DRS case manager to progress it.
- Your dispute will be formally lodged on the day it is registered as a dispute in our system. This must occur by 27 May 2021 to be covered by the dispute resolution provisions of the CTCR Act.
- The DRS team will work with landlords and tenants to negotiate in good faith to make temporary variations to the lease, including rent relief, to address the impact of the COVID-19 pandemic.
- If landlords and tenants are unable to resolve their dispute with the assistance of case management and it is considered suitable for mediation, the case manager may offer access to our confidential and free mediation service. Our mediation service is free of charge for parties negotiating rent relief under the CTCR Act.
- If the matter can’t be resolved through our dispute resolution or mediation process, or both parties agree, the Small Business Commissioner will issue a certificate allowing the matter to proceed to the SAT to make an order.
Due to expected demand, please allow adequate time to seek assistance if you wish to be afforded the protections of the CTCR Act.
If you have not yet commenced the process of requesting rent relief in writing from your landlord, it is recommended you do this no later than Monday, 7 May 2021 so that you have adequate time to make a request for assistance to the Small Business Commissioner if agreement cannot be reached. You can use this template to draft a letter to your landlord, which must be accompanied by sufficient and accurate information about your turnover, such as reports generated from an accounting system.
Land Tax Assistance for Landlords program
The Land Tax Assistance for Landlords program is designed to assist eligible commercial landlords who have provided rent relief to their small business tenants with partial compensation, through a grant linked to their land tax obligations.
Submissions for the grants program has closed on 28 March 2021 for the qualifying period between 1 September 2020 and 31 December 2020.
Getting ready for the next phase
It is important for all small businesses in Western Australia to prepare for the next phase of COVID recovery. From 28 March 2021, many financial measures designed to assist businesses and individuals through the disruption of the pandemic, such as JobKeeper, will end.
While some businesses have recovered well from disruption, others are still experiencing many challenges. It is essential to understand your current and projected financial position from the end of March – read our information about preparing for the end of the emergency period.