The global pandemic COVID-19 has forced many businesses to halt or restrict their activities. causing serious social and economic repercussions worldwide. Due to these hardships, many tenants are struggling to pay rent under their leases, and Landlords are unable to receive rent as a source of income.
In response to the pandemic in Australia, the New South Wales Government has assented to the COVID-19 Legislation Amendment (Emergency Measures) Act 2020 (the Act) last week. The Act gives the Government a temporary power to make regulations for the purposes of responding to the public health emergency caused by the pandemic, expanding their authority to make regulations in the Retail Leases Act 1994 and Residential Tenancies Act 2010 for the following:
Prohibit the recovery of possession of premises by a lessor;
Prohibit the termination of a lease or tenancy in particular circumstances;
Preventing the exercise or enforcement of a right under the Act or agreement for property in particular circumstances; and
Exempting a lessee or tenant from operation of a provision of the Act, or agreement relating to leases or licensing of premises or land.
These regulations are to expire 6 months after they are made, giving the relevant authorities power to make emergency measures to counteract the effects of COVID-19 in the following circumstances upon recommendation of the Minister to the government:
Parliament is not sitting, and is unlike to sit within two weeks after the regulations are made.
in the Minister’s opinion, the regulations are reasonable to protect the health, safety and welfare of lessees under the Act.
What does this mean for Leases?
While the Act give the relevant authorities the power to make changes, the exact changes are still being discussed and no formal regulations has been made yet. However, the purpose of the act was to make regulations to ensure that people are not evicted into homelessness or accumulate insurmountable amounts of rental debts during this crisis, and provide relief for both residential and commercial tenants. We may expect governmental support for both businesses and individuals regarding leases in the near future.
As a point of reference, we can look to the measures taken by other countries to support their residents. France has suspended all bills and rent while major American cities such as New York and Los Angeles have banned evictions. Italy and the United Kingdoms have suspended mortgage repayments to provide support for struggling individuals.
Should similar measures be taken in Australia for leases, tenants may receive rent assistance or abatement, or eviction may be banned, to help Australians affected by the pandemic to tide through until the economy gets back on track. The government may also suspend mortgage repayments, which eases the Landlord’s financial pressure, in turn allowing them to give rent concessions to their tenants.
What can a tenant do if they are facing trouble now?
As a tenant, it is imperative for you to know your contractual rights and obligations under the lease, as certain clauses under the lease may prevent the landlord from evicting or punishing you for being unable to pay rent in these circumstances. Each lease has their own terms and conditions so you may need to seek independent legal advice to better understand your situation. You may also hold informal talks with your landlord to come to an agreement regarding the lease. Through negotiations, both parties can come to a mutually beneficial outcome with the lease continuing in the current economic environment.
While the situation may be tough now, there is hope on the horizon for both Landlords and Tenants. With the new amendments, the government is gearing up to introduce emergency measures to help Australians tide through these economic difficulties. Both tenants and landlords need to stay updated regarding the law due to the rapidly changing regulations in response to COVID-19, and we will be publishing an analysis of the emergency regulations once they are enacted.