Tasmania has acted first in relation to introducing laws regarding rental and eviction relief in Australia as a result of Covid-19 impacts. The Covid-19 Disease Emergency (Miscellaneous Provisions) Act (Tas) 2020 (Covid-19 Emergency Act) is in force and valid from 27 March 2020.
From a commercial property perspective, the key points of the Tasmanian Covid-19 Emergency Act are:
- the new legislation contemplates a prohibition on termination and rental increases for certain leases – this appears to be intended to cover commercial/retail (and potentially other non-residential) leases
- the Minister may, by notice, prohibit termination or rental increases for leases within a class of lease in specified circumstances during the “emergency period” – we do not yet know what “class of leases” are affected
- the emergency period (ie the eviction “freeze period” will be at least 120 days from commencement of the Act, but it might be longer – we do not yet know what the period will be)
- the Act doesn’t appear to provide for any form of rent abatement (with the effect presumably to be that any unpaid rent will continue to accrue throughout the emergency period) – this is likely to be of limited benefit to tenants in the long run if revenue has been seriously affected by Covid-19 (ie these measures might just delay the inevitable termination of the lease if the arrears can’t be paid at the end of the “freeze” period).
- the Act does not (at this stage) appear to restrict the landlord from drawing down on bank guarantees for a failure to pay rent during the emergency period, and it may be that landlords do choose to use the security to protect themselves for the arrears during any freeze period.
Note that the “emergency period” during which specific protections appear to apply starts on (and from) the date of commencement of the Covid-19 Emergency Act, therefore arguably a termination notice issued prior to 27 March 2020 should remain valid.
Land tax measures
The Tasmanian Government has also announced that Land Tax will be waived for commercial property for the 2020-21 financial year, where the business owner:
- is liable for the land tax; and
- can demonstrate that their business operations have been affected by COVID-19.
It’s unclear at the moment who might be captured by the definition of ‘business owner’ but we expect that it would target commercial tenants who are liable to pay land tax via outgoings under their lease.
We will update this article as further developments arise.