News & Insights

While the response has been delayed by comparison to some other states, the Queensland COVID-19 Lease response sets up a fair structure to limit the impact on both Landlord and Tenant.

A short summary of the important issues is below:

• The “Response Period” is from 29 March 2020 to 30 September 2020. A lease breach (non payment of rent) prior to 29 March 2020 remains a default under the lease unless the parties agree to an adjustment.
• “Affected Leases” are defined as retail leases or where the tenant carries on a business and itself or as part of a group turnover of less than $50 million and is eligible for the Commonwealth’s JobKeeper scheme. A Franchisee which meets the criteria is an Affected Lease even if the Franchisor group does not.
• Either party to an Affected Lease can request negotiation of rent and other conditions. Each party must provide information and enter fair and transparent negotiations. For example, a tenant must be able to prove it is eligible for the Commonwealth’s JobKeeper scheme.
• Within 30 days after request landlords must make an offer to the tenant. The offer must provide that at least 50% of rent relief offered must be waived.
• Once an offer has been made the parties must negotiate in good faith.
• If the parties cannot reach agreement, either party can refer the matter to the Small Business Commissioner for mediation.
• A lease extension must be offered for the period equal to any agreed rent waiver/deferral period.
• Deferred rent is to be paid back over a period between 2 and 3 years from the end of the Response Period. Landlords can call on security deposits or bank guarantees after expiry of the lease term to meet any unpaid deferred rent.
• There is a freeze on rent reviews, recovery of possession of the premises, termination of the lease, eviction of the tenant and requiring the payment of interest on unpaid rent or outgoings during the Response Period. Note action can be taken for pre-COVID-19 defaults.

Many Landlords and Tenants will have long since negotiated their own rental adjustment arrangements however if you require assistance Macpherson Kelley has now documented many lease variations and can provide assistance and advice on what other parties have agreed.