Negotiating Commercial and Retail Lease Agreements in the wake of COVID-19

The recent COVID-19 pandemic has forced tenants and landlords alike to be more flexible with their working and financial arrangements – but how has it impacted their lease agreements?

Prime Minister Scott Morrison announced recently that a strict moratorium would be placed on evictions for all residential and commercial tenancies for the next six (6) months. What this essentially means is that if tenants are unable to meet their rental obligations due to severe financial hardship related to COVID-19, they cannot be evicted from the property they are leasing.

This moratorium builds upon the measures that some local councils and state governments have already taken in an effort to protect businesses within their electorates. For example, the Gold Coast City Council has recently announced a relief package for Gold Coast businesses. This is specifically for businesses who have been hit hard by the pandemic and includes waiving rent for businesses with commercial leases on Gold Coast City Council premises from 1 March 2020 until 30 June 2020. Similar measures have been announced by the New South Wales and Queensland state governments.

While these new measures protect commercial and retail tenants from eviction where they cannot make rent repayments, businesses should use it as an opportunity to negotiate a mutually-agreeable deal with landlords. This may allow for evictions to be taken off the table completely, while also ensuring that businesses can continue running as normal once the COVID-19 pandemic is over.

What can you negotiate?

There are a variety of outcomes that can be agreed upon between tenants and landlords which include:

  • Partial or complete waiver of rental payments for a fixed period;
  • Temporary reduction of rental payments;
  • Deferral of rental repayments; and
  • Early termination of leases.

The above is not an exhaustive list however it serves to provide some initial ideas for tenants wanting to negotiate with their landlords.

It is important to ensure that you seek assistance from a legal professional when entering these agreements as there are a multitude of considerations that require careful attention, for instance:

  • Determining how long the relief measures will take effect for;
  • Ensuring that the new agreement is signed in accordance with Section 127 of the Corporations Act 2001 (Cth); and
  • Potentially registering the new lease agreement with the Titles Office where applicable.

If you have been affected by the recent COVID-19 pandemic and are seeking to negotiate your commercial or retail Lease, you can contact our office on (07) 3876 5111 for an obligation free consultation to discuss some further tips to successfully doing so.

Written by

Kayleigh Whittaker, Senior Lawyer

NB Lawyers – Lawyers for Employers
[email protected]
(07) 3876 5111

About the author

Kayleigh Whittaker is a senior lawyer on our Commercial and Property team who assists with Employment Law matters. With a high level of experience in commercial and retail leasing, voluntary and involuntary purchase and sale acquisitions property development and employee relations, Kayleigh provides practical advice to ensure smooth business transactions.