New commercial tenancy legislative changes
The WA Government has passed new laws to offer greater protection for small commercial tenants who are in financial distress resulting from restrictions imposed to combat the COVID-19 pandemic. The legislation aims to help to protect small business tenants from a range of prohibited actions, while they try to negotiate rent relief with their landlords.

Key elements of the legislation include:

  • a six-month moratorium on evictions for certain commercial tenancies (backdated to 30 March 2020)
  • a freeze on rent increases
  • restriction on the penalties for tenants who do not trade or reduce their trading hours
  • no interest to be charged on rent arrears
  • an enhanced dispute resolution process
  • landlords being prohibited from progressing proceedings that occurred after the restrictions were imposed, but before these laws come into operation.

The legislation will be complemented by a WA code of conduct. Currently under development, the WA code – to be based on the National Cabinet Code of Conduct released on 7 April – will provide a framework for negotiations to agree on rent relief measures, to be carried out in good faith between landlords and tenants.

The laws, which come into effect this week, will allow for the emergency moratorium period to be varied by regulation if required.

This legislation applies to small commercial leases during the emergency period, which (at this stage) is six months from 30 March 2020 to 29 September 2020, and covers:

  • a retail shop lease as defined in the Commercial Tenancy (Retail Shops) Agreements Act 1985, or
  • a lease where the tenant is a small business as defined in the Small Business Development Corporation Act 1983, or
  • a lease where the tenant is an incorporated association as defined in the Associations Incorporation Act 2015.

Negotiations between tenants and landlords

As part of the negotiations, the impact of the pandemic on the tenant’s revenue, expenses and profitability should be considered when determining which temporary changes would be appropriate, such as waivers, deferrals and/or reductions in rent. It is anticipated that negotiations should include the financial impact be shared between the tenant and landlord.

Sample Letter to Landlords Rental

Note: The content found on this document does not constitute legal advice and should not be relied upon as such. Whilst every effort has been made to ensure that the information contained is free from error and/or omissions, no responsibility can be accepted by BCCI, its employees or any other person involved in the preparation of this document for any claim (including without limitation, any liability arising from fault, negligence or negligent misstatement) for any direct or indirect loss or damage arising from any use or reliance on this information, or otherwise in connection with it.

 

Date

Address

Address

Address

(<< INSERT COMPANY NAME>>) as tenant at (<<INSERT PREMISES LOCATION AND DESCRIPTION>>)

With the current COVID-19 situation in Australia, we are conscious of the continuing operation of our business and associated financial implications.

We are of course aware of the current rental payment obligations in respect of our tenancy (as attached), although wish to explore the opportunity to broker alternative arrangements with you during this uncertain time.

For example, we kindly request your consideration of either:

A temporary rental reduction (effective for a period of 3 to 6 months), or

A payment plan (details of which may be determined in consultation with you).

Your assistance in considering alternative financial measures to secure our tenancy, will work to minimise the impact on our business operations that COVID-19 represents.

We greatly appreciate your prompt reply to discuss possible options suitable for our business.

Kind Regards,

<INSERT YOUR NAME>

<INSERT YOUR ROLE>

<INSERT YOUR COMPANY NAME>

Attach – Copy of lease

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