As featured in the November Edition of Queensland Hotels Association’s QHA Review.
As we approach the end of a tumultuous year, many Queensland hoteliers will welcome the State Government’s decision to extend the commercial rent relief code of conduct to 31 December 2020. Consistent with the extension of similar relief by other state governments, these extensions and the associated rental relief will provide much-needed support to assist the hospitality industry to get back on its feet in the wake of COVID-19 and in the current constrained trading environment.
How the Regulation operates
It is relevant to note that, in light of the recent extension (with the necessary amendments) the Regulation remains largely consistent in its operation. More particularly, eligibility is subject to turnover tests and the tenant must be eligible for (but not necessarily enrolled in) the Federal Government’s JobKeeper Payment scheme.
As such, it is important to carefully consider the changed eligibility for JobKeeper, as there is no longer a requirement for a 30% threshold reduction in turnover, but a fall in turnover test against comparable quarters.
Prohibition on prescribed actions
Despite the amendments to the eligibility criteria for the JobKepper scheme, the extended regulatory provisions commercial regarding rent relief largely remain the same in their operation. Importantly, the moratorium on evictions remains, however, landlords will no longer be required to offer 50% of rent relief in the form of a rent wavier. That is to say, ongoing relief can be wholly in the form of deferred rent.
The Regulation continues to prohibit Landlords from taking a prescribed action against a tenant for the non-payment of rent or outgoings, or not being open to trade. A ‘prescribed action’ is broadly defined to include termination, eviction, exercising a right of re-entry, or claiming on a bank guarantee, indemnity or security deposit.
Cooperation between the parties
The scheme is compulsory in its operation and calls on landlords and tenants to negotiate with each other in good faith. The Regulation is somewhat vague in prescribing what information is to be provided by tenants in seeking rent relief, however in practice, we have seen this confined to general turnover figures.
If your landlord will not cooperate or an agreement cannot be reached as to an appropriate reduction or restructuring of your rent payments, the next step is to proceed to mediation and if necessary, Queensland Civil and Administrative Tribunal (QCAT). I note that at the time of writing, there have been no published decisions by QCAT considering these issues so it is fairly safe to assume the scheme must be working.
The effect of the extension of the commercial rent relief code means that it is not too late for Queensland businesses that have been impacted by the COVID-19 pandemic to obtain rental relief from their landlord.
While there has been no direct comment as to the likelihood of further extensions, doing so will require the balancing of the interests of landlords and tenants. Perhaps the clearest indicator at this early stage is the extended operation of JobKeeper until 28 March 2021, as the Queensland Government may look to align commercial rent relief to the same timeframe. Following in the footsteps of JobKeeper, it is likely that any further extension of commercial rent relief is likely to have a confined scope of operation and/or more onerous criteria for qualification.
In any event, this current extension to 31 December 2020 comes as a welcome relief for Queensland hoteliers as we move towards the Christmas period and hopefully, a busy end to the year for the hospitality sector. Please do not hesitate to give me a call on 07 3224 0230 should you have any concerns or questions about negotiating rent relief or other commercial leasing or property arrangements.