The Retail & Commercial Leases (COVID-19) New Regulation

Written on the 24 November 2020

The Retail & Commercial Leases (COVID-19) New Regulation

The new Retail and Other Commercial Leases (COVID-19) Regulation (No 2) 2020 came into effect on 24 October 2020. It replaces the Retail and Other Commercial Leases (COVID-19) Regulation 2020 (Regulation No 1), which expired on 25 October 2020, and extends the prescribed period until 31 December 2020.

The Regulations were set up to enable landlords to easily enter into negotiations and offer rent relief to their struggling tenants from the outset of the COVID-19 pandemic. 

It is advised Property Managers and landlords should advise their tenants of the requirement to re-establish eligibility if they wish to continue receiving rent relief beyond the original expiration date of 25 October 2020 and until 31 December 2020. This means that rent relief arrangements made under Regulation No 1 are not automatically extended by virtue of Regulation No 2. Requests to renegotiate rent may be made by eligible tenants if negotiations do not relate to a period where rent has already been reduced, waived or deferred. 

Regulation No 2 makes it clear that it only applies to retail shop leases entered into prior to 24 April 2020, by excluding in the definition of a 'commercial lease', a lease entered into on or after that date (unless entered into because of an option to extend or renew, or any other extension or renewal of an existing lease on the same terms as the existing lease). 

Clause 7(4)(b) of Regulation No 2 has been introduced which requires a party to an impacted lease to commence good faith negotiations within 14 days of receiving a request to renegotiate, unless the parties agree another period. 

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