Rent Relief FAQs
Following the release of the National Cabinet’s Code of Conduct for commercial tenancies in April, the Queensland Government released the Retail Shop Leases and Other Commercial Leases (COVID-19 Emergency Response) Regulation 2020 on 28 May 2020 aimed to assist small businesses recover and rebuild. On the same day the regulation was passed, the Office of the Queensland Small Business Commissioner (OQSBC) was activated to provide small businesses with information, advocacy, and informal dispute resolution and mediation services for small business leases.
The OQSBC provides information and advocacy support to small businesses, and informal resolution and mediation of COVID-19 affected small business leases.
For more information, please use the resources listed below:
- Office of the Queensland Small Business Commissioner Website
- Hotline - 1300 312 344
- WEBINAR ON DEMAND: Commercial rent relief disputes
1) With regards to mediators, can you please advise what the 'real' lead time is with regards to their availability?
Not all notices of disputes received by the OQSBC have necessarily progressed to mediation. For example to date 27 have been successfully resolved between the parties, once they made contact with the OQSBC for assistance. However for the 16 disputes which have so far needed to progress to a mediation, we have been able to schedule a mediation conference with a mediator within 7-10 days.
2) Can a landlord request full financials to justify rent relief?
If by 'full financials' you mean lodged ITR, P&L, Balance sheet and financial statements, then the answer is that these are likely to exceed what the regulations require. The regulation and National Code each reference 'turnover' (ie the impact of COVID on turnover) rather than profit. s.14(2) of the regulation addresses what information is required to be shared. It requires information that is true, accurate, correct and not misleading; and sufficient to enable the parties to negotiation in a fair and transparent way. The regulation itself provides some examples, and there is also a list on the OQSBC website (scroll down about three quarters of the page).
3) Can a landlord increase the rent with increases in the CPI? Will the deferred portion increase with the CPI % increase?
The purpose of the regulation is to mitigate the effects of COVID19 on small business tenants and landlords. The regulation prevents rent increases from being applied during the response period (29 March to 30 September). However the example given in s.13(2) of the regulation explains that a landlord can review rent as provided for under a lease, and make a decision to increase rent as a result of that review. However the increase cannot take effect until after 30 September when the response period ends.
The same goes for CPI increases that are provided for in a lease. When a rent reduction has been agreed between the parties, and it includes deferral of rent, the deferred rent cannot have increases imposed upon it. The deferred rent must remain at the standard rate of rent payable during the response period. We note that s.17 of the regulation says that the agreement to defer rent must not allow the lessor to require the lessee to pay interest or any other fee or charge on the deferred amount unless the lessee fails to comply with the agreement.
4) If the parties can agree to an alternative period for repayment of the deferred rent (such as 18 months). This would be inconsistent with section 17. Are you proposing that this is an agreement under section 10 (inconsistent with the Regulation but able to be agreed unless the parties press for a Regulation compliant agreement)?
S.10 of the regulation states that nothing prevents the parties from entering into an agreement of their own. An alternative period of 18 months for repaying of deferred rent is not prohibited if both parties agree. The regulation is silent on the topic of leasing agreements between related parties. The regulation addresses lessees that are connected with or affiliated with other parties, but not where the leased parties are related. Our position is to consider the purpose of the regulation. It is to mitigate the effects of COVID19 on the parties. If the related parties are unable to reach an agreement regarding rent, then they may seek assistance from the OQSBC.
5) I spoke to my landlord at the beginning of April and he said for April and May he would defer the rent but I would need to pay at a later date. Am I able to now ask to just pay the % of the difference between what i made this April and May this year to last?
You can ask the landlord to revisit the rent reduction, now that the regulations have passed and the framework for proportional rent reduction is known. You should follow the 5 Phases outlined in the regulation, which are outlined on our website.
6) What if you have to close your business but still have 9 months left on your lease, will you have to pay the remaining months?
Rent due after 30 September will still be due, and you should negotiate with your landlord any rent due between now and the end of September.
7) We are a 23-year long tenant of a Stockland Shopping Centre. Our travel agency has been closed since the 1st of April and we plan to reopen soon, but have been in awaiting the result negotiations with the landlord regarding rent relief. Because of ongoing refunds, our year on year sales are down by minus 115% so we effectively have no inbound revenue at this point. We have requested a rent-free period of 6 months followed by 50% rebate for another 6 months. However the best the landlord has come up with is 50% abatement and followed by 50% deferred rent to kick in when the rent resumes to normal 1 October. I have requested that as a travel business we need special consideration but they are offering the one size fits all deal to all tenants. What do you suggest?
The landlord's offer, if we have understood it correctly, represents a rent reduction of 100% of the rent payable until the end of the 6 month response period. The regulation requires that at least 50% of the reduction must be a waiver, and the rest a deferral. This appears to be what your landlord has offered. If you wish to negotiate a higher proportion of waiver and less deferral, given your situation, then we encourage you to commence the 5 Phase negotiation process outlined on our website and seek assistance from our office if you need it.
8) My sub-landlord is not willing to offer any discount on the rent. Only 20% deferral or pay 3-month full amount to terminate (break) the lease. What can I do to protect ourselves?
Now that the regulation has commenced, we encourage you to commence the 5 Phase negotiation process outlined on our website and seek assistance from our office if you need it.
9) If landlord has given 50% or 100% waiver of rent, do they still have to pass on any reliefs they have received if it is less than what they have already given to tenant?
The short answer regarding land tax relief accessed by a landlord, is that it is not as simple as applying this benefit on top of a proportionate rent reduction. The regulation requires the financial circumstances of both parties to be taken into consideration when agreeing upon a rent reduction. If the landlord has accessed COVID19 financial relief, then this is a factor to be taken into account.
It might be that the landlord has already taken such relief into account when assessing the amount of rent reduction. Now that the regulation has commenced, you are able to re-negotiate the rent reduction previously agreed, but stepping through the 5 Phases required in the regulation. We have set out those steps on our website.