On 28 May 2020, the Queensland Government (finally) introduced regulations to implement the National Cabinet Mandatory Code of Conduct in relation to commercial leasing during the pandemic. The regulations may be found here.
The Regulations have not implemented the Code of Conduct verbatim. There are key differences including notably:
- The rent concession to be provided by the Landlord is not directly linked to the reduction in turnover for the Tenant’s business (instead, the turnover reduction is one of several factors); and
- The Landlord and Tenant must take into account the Landlord’s financial position (reflecting that Landlords, like Tenants, come in all shapes and sizes).
The implication of the above is that a Tenant with a 60% reduction in turnover is not necessarily guaranteed to receive a 60% rent concession from the Landlord, depending on all the relevant circumstances. However, the requirement for half of the rent concession to be in the form of a rent waiver remains.
Tenant eligibility is determined by whether the Tenant is an SME entity (generally, under $50m turnover) and eligible for the job keeper scheme, which remains largely consistent with the Code of Conduct.
The Regulations confirm that any arrangements already implemented between the Landlord and Tenant remain valid – however, either Landlord or Tenant may seek to renegotiate following the new process in the Regulations if desired.
At the end of the day, rent concessions are a balancing act and both parties need to come to the table to reach a resolution. If they can’t resolve it themselves, then the dispute can be referred to as the Small Business Commissioner for a compulsory mediation process. However, both Landlords and Tenants should take caution that invoking the dispute process may not necessarily lead to an outcome (and the Commissioner has the discretion to dismiss disputes) where the dispute is frivolous, vexatious or the mediation process has not been invoked in good faith.
Stay tuned for our next article which will provide a step-by-step guide for Landlords and Tenants, next week.