COVID-19 Legislation Amendment (Emergency Measures) Act 2020 (NSW) (Act) received assent on 25 March 2020, giving the NSW Government the power to prohibit: the repossession of premises, terminate a tenancy agreement, or regulate / prevent the enforcement of landlords rights, and exempt a tenant or classes of tenants from complying with the law or their tenancy agreements for six months from the making of the regulations, whilst the Federal Government contemplates rent freezes.
The Act introduces regulation making powers for the Minister for the purposes of responding to the public health emergency caused by the COVID-19 pandemic, which impacts the following acts:
- Residential Tenancies Act 2010;
- Retail Leases Act 1994;
- Boarding Houses Act 2012;
- Residential (Land Lease) Communities Act 2013;
- Agricultural Tenancies Act 1990;
- any other Act relating to the leasing of premises or land for residential or commercial purposes.
At this stage, it does not appear that regulations to this effect have been passed.
From a transactional perspective it will be interesting to see how the market responds, particularly whereby tenants focus on the non-payment of rent, access and breaking their lease. In certain areas, we are seeing an influx of commercial dialogue on:- abatements, deferrals, rent free period, reductions, etc. which are being requested by tenants as a result of the COVID-19 pandemic, and responded to by landlord in a way to preserve the face value of the asset and their income stream. However, the question remains whether these arrangements will be enforceable if, and when, the regulations are made.
We recommend that, until such time as the regulations are made and there is more certainty as to the composition of the Federal Governments next stimulus package as it relates to NSW tenancy arrangements; the parties exercise caution when considering whether to enter into any type of commercial arrangement dealing with their tenancy arrangements.
At HWLE, our COVID-19 think tank is made up of National Partners (and experts) in the Property, Litigation, Construction, Corporate / Commercial and Insurance Groups are currently in real time considering national issues for our landlord and tenant clients in relation to the widespread ramifications of the COVID-19 pandemic.
This article was written by Kendra McKay, Partner and Alexandra White, Partner.