Am I entitled to rent relief? And what do I need to do to access it? Stephanie McGrath provides some answers
Most states and territories have adopted the Federal Government’s announced Code of Conduct for commercial leasing. Some states are awaiting relevant Bills to be passed and given royal assent – that is, become law.
Information in this article is correct as at the time of writing but not necessarily at the time of publication, for example, if a Bill has been passed with some amendments. Before acting on the information in this article, please contact the author for real-time updates.
In these rapidly changing times, we answer five of the most common urgent queries we have received.
1. I signed a lease before COVID-19 so I am entitled to rent relief, right?
Until the State or Territory in which your pharmacy is located has adopted the Code of Conduct as law, the answer is not certain.
Generally speaking, if your lease is an eligible lease and was in force when the law in your state or territory came into effect, you will be eligible.
By way of example, the likely answer in Victoria, Queensland, New South Wales and Tasmania would be “yes”. Generally speaking, in those states where the Code has been adopted, if you 1) have an eligible lease in effect at the date the legislation came into effect; 2) are a small- to medium-sized tenant with an annual turnover of less than $50m and; 3) you participate in the JobKeeper scheme, you will qualify for rent relief.
You may not need a signed lease, in effect noting that tenants who hold pharmacy leases are more often than not retail tenants whose leases are governed by retail legislation. If that is the case, your lease may have been deemed to have been entered into even though a written document is not signed e.g. if you have started to pay rent or taken possession (subject to the applicable state or territory based requirements).
2. Do I have to do anything?
First, you need to seek expert advice on the law as it applies to the state or territory in which your pharmacy is based. A lawyer can assist you to follow the process under the relevant state or territory based legislation for seeking rent relief, which may include showing proof that you are a small- to medium-sized business and participate in the JobKeeper scheme.
Your lawyer can also assist with what might constitute appropriate evidence where the legislation lacks sufficient direction.
3. Does my landlord have to offer me rent relief?
If the lease is an eligible lease, yes.
If you make a request in accordance with the legislation, your landlord must respond promptly (e.g. within 14 days in Victoria) and their offer must, amongst other things, ensure that no less than 50% of the relief is by way of rent waiver unless otherwise agreed.
The parties must co-operate and act reasonably and in good faith in all discussions and actions associated with the rent relief request. If the parties cannot reach agreement, the matter may be referred to mediation.
4. What about outgoings?
You can request relief from outgoings. Landlords will need to consider waiving recovery of outgoings or other expenses for the relevant period and take into account any period during which the pharmacy was forced to close.
5. What can I expect?
Subject to each state and territory’s legislation, generally speaking the Code provides the following key guidelines:
- landlords cannot terminate leases for non-payment of rent during the relevant period;
- tenants must comply with other terms of their lease, subject to any negotiated amendments with their landlord;
- rent relief needs to be proportionate e.g. waivers, deferrals etc assessed on a case-by-case basis;
- a fair commercial basis for rent deferral payment plan terms;
- landlords to pass on statutory charge relief e.g. land tax or council rates;
- no fees, interest or other charges may be applied to rent waived or deferred in exchange for agreement; and
- landlords’ rights to terminate, re-enter the premises or draw down on security deposits for non-payment of rent are restricted during the relevant period.
In addition to the above, there are other rights to be aware of in relation to prohibition on rent increases, extending the lease term and change in trading hours. If you have any urgent queries, please do not hesitate to contact the author. We are happy to answer queries by phone.
If you require any specific information or assistance, please do not hesitate to contact the writer on 0488 00 24 24 or firstname.lastname@example.org.
Stephanie McGrath is a Legal Advisor practicing in commercial law with a focus on health, business and property across Australia. Stephanie’s significant pharmacy experience includes buying and selling interests in pharmacies Australia-wide, advising clients in relation to compliance with the requirements of different State and Territory Pharmacy Regulatory Bodies, applications to Medicare, applications and objections under the Pharmacy Location Rules and Ministerial Discretional Applications, partnership disputes and much more.
Disclaimer: The content of this article is intended only to provide a summary and general overview on matters of interest. It is not intended to be comprehensive nor does it constitute legal advice. You should seek legal or other professional advice before acting or relying on any content of this article.