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FAQs: COVID-19 commercial tenancy changes

Last updated: 10 September 2020

The WA Government has announced that the emergency period (currently due to end 29 September 2020) has been extended to 28 March 2021. Further details of what this means for landlords and tenants will be available shortly.

Can tenants stop paying rent if they have been affected by COVID-19?

The new laws do not mean tenants can refuse to pay rent if they are able to do so.

Are JobKeeper payments to be included when determining turnover?

No, they are excluded, as is the cash flow boost. Full details of other exclusions are on the Australian Taxation Office (ATO) website.

Over what length of time should the turnover test be?

Unless the landlord and tenant agree otherwise, a decline in turnover can be calculated using the turnover tests detailed in section 8 of the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 (Commonwealth). For businesses that have been operating more than 12 months, the basic test will usually apply. The test can be used in relation to a particular month or a quarterly period; it is the tenant’s decision as to which period is selected. This will be used as the basis of negotiation between parties.

How is the turnover test used for rent relief?

The turnover test is used to determine whether a tenant is eligible for rent relief and for negotiating the rent relief agreement. Unless agreed otherwise by the landlord and tenant, rent relief is to be in proportion to the reduction in the tenant’s turnover during the emergency period, which is from 30 March to 29 September 2020 (unless extended).

How long must landlords provide rent relief for?

The maximum period that rent relief can be applied for is for the emergency period from 30 March to 29 September 2020 (unless extended). The request for rent relief can be backdated to 30 March 2020; you can therefore apply in May 2020 for the relief to start from an earlier date.

Will tenants have to pay interest on rent that has been deferred?

No, landlords cannot charge interest or add other charges to deferred rent.

What happens if the landlord refuses to respond in writing?

The landlord is compelled by law to respond. Tenants who find themselves in this situation should refer their landlord to the Act, and if there is still no response contact us before the end of the emergency period (currently 29 September 2020, unless extended).

What if a landlord and tenant are unable to reach an agreement about rent relief?

If no agreement can be reached on a rent relief, contact us for help through our dispute resolution service, this may include referral to a mediator. Our mediation service is currently available free of charge in relation to issues associated with rent relief.

PLEASE NOTE: If you have a dispute relating to claiming rent relief under the Commercial Tenancies (COVID-19 Response) Act 2020 and need help to resolve the issue, you must contact us before the end of the emergency period (currently 29 September 2020, unless extended).  

If this mediation fails to resolve the issue, an application can be made to the State Administrative Tribunal (SAT) for determination. An application to resolve a dispute cannot be made to the SAT unless:

  • One or both of the parties that come to our dispute resolution team at the SBDC, and the Small Business Commissioner has provided them with a certificate to proceed to the SAT; or
  • Neither of the parties requested assistance from the dispute resolution team at the SBDC and they both agree to go directly to the SAT (this option is only available during the emergency period).

When the SAT is making a decision it is likely to take into consideration any comments the Small Business Commissioner has made on the certificate regarding the good faith conduct of the parties. 

From 17 August no fee will be charged by SAT in relation to issues covered by the Commercial Tenancies (COVID-19) Act 2020.

The John Curtin Law Clinic at Curtin University has created a short video explaining what to expect if you take a COVID-19 related commercial tenancy issue to the SAT. Please note, it only provides general information, not legal advice.

Can a tenant make a further request for rent relief after an original agreement has been made?

A tenant can make a further request for rent relief to the landlord if their financial circumstances changed substantially after an agreement was reached, by following the same process.

Can a landlord compel a tenant to extend a lease as a condition of offering rent relief?

No, extending a lease should be part of a separate discussion and not linked to rent relief.

Can a landlord draw down on tenant’s security to cover unpaid rent?

No, landlords may not draw down on a tenant’s security to cover unpaid rent during the emergency period.

Will confidential information provided by a tenant or landlord remain confidential?

A landlord or tenant must not divulge or communicate protected information obtained in connection with the code, unless authorised under the code.

What support is there for tenants in State Government owned premises?

Rental payments for small businesses will be waived for six months (30 March to 29 September 2020).

Are there any circumstances in which a landlord can evict a tenant during the emergency period?

A landlord can still evict a tenant for reasons not related to COVID-19, for example if the tenant has damaged the premises or failed to vacate the premises after the expiry of a fixed term lease.

Is there any financial support available for landlords?

The Australian Banking Association (ABA) announced a Small Business Relief Package in response to COVID-19 to allow borrowers such as commercial landlords of properties to access financial support.

Eligible landlords can also apply for the Land Tax Assistance for Landlords program to receive payments equivalent to 25 per cent of their land tax bill for 2019-20 relating to eligible tenants.

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