23 April 2020

COVID-19 Act Passed – Impact on Residential & Commercial Landlords

Jacob Duane, Dan Ronan
Jacob Duane Commercial Property Lawyer

Late on Wednesday 22 April 2020 the COVID-19 Emergency Response Bill 2020 (COVID-19 Act) was passed. In our latest article, we look at the impacts of the Bill on commercial and residential landlords

It is important to firstly understand the intent behind the Bill.

Understanding the COVID-19 Act 

Its purposes are:

  1. to protect the health, safety and welfare of persons affected by the COVID-19 emergency;
  2. to facilitate the continuance of public administration, judicial process, small business and other activities disrupted by the COVID-19 emergency, including by easing regulatory requirements and establishing an office of the Small Business Commissioner;
  3. to provide for matters related to residential, retail and prescribed leases affected by the COVID-19 emergency; and
  4. to support the Queensland rental sector during the COVID-19 emergency period.

What the Act does is allow Ministers to make extraordinary regulations that override other Acts only if the Minister is satisfied the regulation is necessary for the purposes of the COVID-19 Act. Effectively the COVID-19 Act allows the adoption of Henry VIII clauses.

In 1997 the Scrutiny of Legislation Committee of the Queensland Parliament published “The use of Henry VIII clauses in Queensland Legislation” (Report). It defined a Henry VIII Clause as one of an Act of Parliament which enables an Act to be “expressly or impliedly amended by subordinate legislation or executive action.

The Queensland Legislation Handbook states that Henry VIII clauses should not be used. It is interesting that COVID-19 is considered so significant an impact on Queensland that such clauses will now be permitted.

The Report concluded that Henry VIII clauses may be justified for a number of reasons, including “to facilitate the application of national schemes of legislation”. Clearly that is what is happening now.

So what does this mean for Queenslanders?

  1. Unfortunately, it does not guarantee the holding of the State of Origin this year.
  2. It allows Ministers of various Queensland Departments to make regulations to ensure the health and safety due to the COVID-19 emergency and the continuance of public administration, small business and other activities.

Regulations of the Act 

The regulations the COVID-19 Act will include, among others, are:

  1. The establishment of the Small Business Commissioner to provide a single point of information and advice, especially in relation to dispute resolution;
  2. Protect residential tenants who are not able to meet their obligations;
  3. Remove landlord obligations to undertake routine maintenance if the landlord is unable to enter the premises; and
  4. Introduce good faith leasing principles for landlords and tenants of non-residential tenancies.

At the time of writing, the only Regulation that has been tabled in the Residential Tenancies and Rooming Accommodation (COVID-19 Emergency Response) Regulation 2020 (Regulation).

The Regulation will override provisions in the Residential Tenancies and Rooming Accommodation Act 2008. The Regulation is detailed and provides for:

  1. Protection of tenants who suffer a 25% loss of income or where the rent payable is more than 30% of the tenant’s income;
  2. A moratorium on evictions until the earlier of 29 September 2020 or the last day of the COVID-19 emergency period;
  3. If a tenant is suffering excessive hardship an extension of the term until 30 September 2020; and
  4. A limitation to recover reletting costs to one week’s rent if the tenant suffers a loss of income of 75% or more and the tenant has less than $5,000 in savings.

It is interesting to note that the moratorium on evictions does not prevent a landlord ending a residential tenancy for any reason other than a failure to pay rent. Presumably, that would allow a landlord to end a residential tenancy agreement if the tenant is damaging the landlord’s property. The usual process to end the agreement would need to be observed.

We will not know the impact of the COVID-19 Act and new regulations until more are tabled.

You can review the tabling of regulations at this link.

If any landlords and tenants require assistance in negotiating commercial leasing relief, then please contact Bill Purcell, Jacob Duane or Daniel Ronan in our Property and Real Estate team.

 

 


Individual liability limited by a scheme approved under professional standards legislation (personal injury work exempted).

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