New SA legislation in force to deal with commercial rent issues arising from COVID-19.

We imagine that the SA Small Business Commissioner is about to get even busier!

New SA legislation addressing commercial (as well as residential) tenancies has been introduced.

Measures provided for during the current prescribed period include:

  • Preventing a lessor from taking any prescribed action against a lessee suffering financial hardship resulting from the COVID-19 pandemic (e.g. termination of lease, eviction, seeking damages or enforcing guarantees or requiring payment of interest on unpaid rent) on the grounds of a breach of the lease due to: 
    • The failure to pay rent (or outgoings)
    • The business not being open for business in accordance with the trading hours specified in the lease or
    • Any other act prescribed by regulations to the Act.
  • An act or omission of a lessee that is required by direction of the State Government due to the pandemic will not be deemed a breach of the lease and will not be grounds for a lessor to terminate the lease or take other action against a lessee.
  • A lessor must not increase the rent (other than rent determined by reference to turnover or unless otherwise agreed) if the lessee is suffering financial hardship resulting from COVID-19 pandemic.
  • A party can apply to the Small Business Commissioner for mediation of a dispute, or a determination as to whether or not a lessee is suffering such financial hardship, or other related issues – Application to the Magistrates Court for determination is then available.
  • Regulations further specify that a lessee will be taken to be suffering the required financial hardship if the lessee is eligible for, or receiving, a JobKeeper payment.

The section of the Act dealing with commercial leases will be taken to have come into operation on 30 March 2020 and will expire on a future date to be determined (either when all relevant SA declarations regarding COVID-19 have ended or six months after the commencement of the Act, whichever is earlier).

Note also that the Code of conduct for commercial tenancies as announced by the Prime Minister earlier this month is not yet mandated in SA, but is being worked on so it will be a matter of ‘watch this space’ for further changes.

It will be very much a ‘case by case’ assessment for parties considering what action to take in relation to their commercial lease, both in terms of the legislation and general business strategy. 

For further details, see:

  • The text of the COVID-19 Emergency Response Act 2020 and (Commercial Leases) Regulations  here.
  • This video by the Small Business Commissioner which covers the changes here.