On 13 January 2022, the NSW Government announced the introduction of the Retail and Other Commercial Leases (COVID-19) Regulation 2022 in response to the ongoing impact of the COVID-19 pandemic on small businesses. We previously covered in detail how the 2021 regulation impacted landlords and tenants in our article - Retail & commercial leasing amendments made in NSW in light of ongoing COVID-19 crisis. We have summarised the key changes resulting from the 2022 Regulations below.

Summary of changes

Prescribed Period

The Prescribed Period under the 2022 Regulations has been extended by 2 months to end on 13 March 2022. That means that the Prescribed Period is now defined in the 2022 Regulations to mean the period between 13 July 2021 and 13 March 2022.

Rent Relief for Impacted Lessees

The 2022 Leasing Regulations continue to protect “Impacted Lessees”, being the tenants who qualify or would have qualified if still available, for a relevant government grant or payment.

However, the criteria for determining if an Impacted Lessee is eligible for a rent reduction after 30 November 2021 has changed.  The following requirements must now be satisfied by the  Impacted Lessees in order to qualify:

Prescribed Period

Grant/Payment eligibility

Annual turnover

13 July 2021 to 30 November 2021

Less than $50 million in 2020-2021 financial year

1 December 2021 to 13 March 2022

(Provided they were still available)

Less than$5 million in 2020-2021 financial year

It is important to note that any previous rent relief arrangements are not automatically extended due to the extension to the Prescribed Period. A new request for rent relief must cover a different time period than previously agreed between the parties. Tenants are also required to provide evidence that they are still eligible for rent relief under the 2022 Leasing Regulations.

The 2022 Regulations also introduced new conditions when renegotiating commercial rents, which include:

  • Any government relief made to an Impacted Lessee is to be treated as part of their turnover;
  • The landlord is not required to reduce rent for periods when the tenant did not qualify as an Impacted Lessee; and
  • Any negotiated rent reduction does not apply at times during which the tenant does not qualify as an Impacted Lessee.

No Rent Increases

The 2022 Regulation continues to prohibit a landlord from increasing the rent payable under an Impacted Lease during the Prescribed Period. This does not include rent determined by turnover.

Mediation before Prescribed Action

The 2022 Regulation extends the obligation under the earlier Regulations for a landlord not to take any Prescribed Action (you can see a full list of what these actions are here) against an Impacted Lessee unless the parties have first renegotiated the rent and attempted to mediate the dispute.

This does not apply if the Prescribed Action for a breach (Prescribed Breach) is unrelated to the economic impacts of the COVID-19 pandemic.  

Need commercial leasing advice?

If you have any questions or concerns about these new commercial leasing changes or how they may affect you as a landlord or tenant, our Commercial Leasing Lawyers are here to assist. Call for the Ivy Law team a no-obligation consultation on 02 9262 4003 or submit an online enquiry to get started.

You may also be interested in our article: “Understanding the fine print in a commercial lease agreement.”

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