Rent Review After COVID

The Retail and Other Commercial Leases (COVID-19) Regulation (Regulation) which was enacted by the NSW Government on 24 April 2020 in response to the Covid-19 pandemic has lapsed on 28 March 2021 in line with the end of JobKeeper.

If you were an impacted tenant, Part 2, section 6(2) of the Regulation provided that the rent payable under the impacted lease could not be increased during the Prescribed Period, other than rent or a component of rent determined by reference to turnover.

While the Regulation provides that rent could not be increased during the Prescribed Period, this does not mean that the rent review(s) under your lease did not take place during the Prescribed Period. The Regulation simply meant that the landlord could not charge the tenant the increased rent until 28 March 2021.

Now that the Prescribed Period is over (as at 28 March 2021), landlords are entitled to increase the rent payable under the impacted lease in accordance with rent reviews which would have taken place during the Prescribed Period.

This is an approach being adopted by a number of landlords and you may find the following clause in any agreement concerning rent relief:

“on and from the expiry of the Prescribed Period, the Lessee must pay the increased Rent payable as a result of any review undertaken in accordance with the lease, provided that the Lessee is not required to pay any increase in Rent in respect of the Prescribed Period.”

In summary, tenants are not required to pay rent increased as a result of a rent review during the Prescribed Period. However, on and from 28 March 2021, the increased rent which would have been charged to the tenant in accordance with the rent review provisions in the lease can be charged to the tenant.

If you are a landlord or tenant and require further assistance with respect to applying rent reviews or interpreting the Regulations, contact our team of experienced commercial leasing lawyers to discuss your circumstances and how we can help.

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