Rent abatement: COVID-19 Response (Management Measures) Legislation Act 2021
Amin Osama | 09/11/2021
On 3 November 2021, the COVID-19 Response (Management Measures) Legislation Act 2021 became law. Section 245G of the Act introduces an implied clause into lease agreements which requires a “fair” rent abatement when a tenants income has been impacted by the epidemic.
A fair proportion of rent will cease to be payable:
in the affected period beginning from 18 August 2021;
when there is an epidemic; and
where the lessee is unable to gain access to all or any part of the leased premises to conduct fully their operations in all or any part of the leased premises due to health and safety reasons related to the epidemic.
What constitutes “fair” must be agreed upon by the lessor and lessee. However, the parties must consider the loss of income experienced by the lessee when deciding what is “fair” in the circumstances. As such, the loss of income is the paramount consideration.
Where parties are unable to agree
In situations where parties are unable to agree on what a “fair” abatement is, the Act provides that such disputes shall be referred to arbitration under the Arbitration Act 1996.
We have experience in negotiating commercial lease rent abatements due to the COVID-19 epidemic, and our team has vast experience in arbitrations. If you have any questions about how the Act applies to your situation, or if you need any assistance with negotiations or arbitration, please contact Scott McKenna today.