Emergency changes to tenancy laws – COVID-19 Emergency Response Bill 2020 (ACT)
Important changes to tenancy laws in the Australian Capital Territory (ACT) are being proposed under the COVID-19 Emergency Response Bill 2020 (the Bill) which was presented to the Legislative Assembly on 2 April 2020. The changes could come into effect as early as next week.
What are the changes?
The proposed Bill amends the Leases (Commercial and Retail) Act 2001 (ACT) (the Leases Act) to grant the Minister (the Attorney-General of the ACT) the ability to make declarations governing commercial and retail leases and residential tenancies. In particular, declarations can be made to:
- prohibit landlords from terminating a lease in stated circumstances
- prohibit landlords from recovering possession of premises in stated circumstances
- change any period under the lease or the Leases Act in which a tenant or landlord must or may do something
- change, limit or prevent the landlord from exercising or enforcing any other power under the lease or the Leases Act, in stated circumstances
- exempt a tenant or class of tenants from the operation of a provision of the Leases Act, the lease made under the Leases Act or any other agreement relating to the lease of the premises (meaning that concessions may be made specific to certain groups of tenants and made to document other than the lease itself, such as associated licences).
With respect to residential tenancies, the Bill amends the Residential Tenancies Act 1997 (ACT) (the RT Act) to allow the Minister to make similar declarations as those listed above in respect of residential tenancy agreements and occupancy agreements, and in addition, declarations may also be made that:
- prohibit or limit the matters that can be included in a residential tenancy database
- modifying a provision of the RT Act (including a standard residential term) to allow parties to a residential tenancy or occupancy agreement to agree to temporary rent or fee reductions.
The above declarations are not intended to be permanent changes, but will stay in place while the impact of the public health emergency continues.
Interestingly, the Bill itself does not implement the 6 month moratorium on evictions. This Bill allows the Minister the scope to introduce restrictions on evictions through the declaration process. We understand that the details around the moratorium on evictions are still being considered and it is unlikely to be a blanket moratorium.
Separately, the Minister issued a commencement notice of sections 4 and 20 of the Residential Tenancies Amendment Act 2020. From 6 April 2020, clause 28 of the standard residential tenancy terms in Schedule 1 will be changed so that tenants cannot be required to pay more than 2 weeks rent in advance unless the tenants agree. This will affect all new fixed term tenancies entered into from next Monday or periodic tenancies on foot. This is a permanent change and was part of the residential tenancies reform that are underway.
What kind of leases and tenancies will be affected by these changes?
The Leases Act applies to a broad range of retail and commercial tenancies in comparison to other jurisdictions. This means declarations can be made with respect to any lease subject to the Leases Act. Such tenancies include:
- retail premises, other than large excluded premises (premises over 1,000 m2 that are leased to listed public companies) – noting the broad interpretation given to tenants who supply services by retail
- premises located in the retail area of a shopping centres
- premises under lease to an incorporated association
- premises under lease to an unincorporated charitable entity other than residential premises
- small commercial premises (premises no more than 300 m2)
- child care centres
- sport centres
- art galleries
- gardening supply centres
- service stations.
Declarations can also be made with respect to all residential tenancies and occupancy agreements under the RT Act. This does not include aged care agreements if the accommodation is provided under the Aged Care Act 1997 (Cth).
What are the particular circumstances and the actual impacts?
The proposed legislation has not provided what the ‘stated circumstances’ are, and these will be determined by the Minister in order to best respond to the public health emergency caused by the COVID-19 pandemic.
It is likely that any declarations made, will, amongst other things:
- prohibit landlords from evicting tenants due to non-payment of rent
- encourage landlords and tenants in residential tenancies to reach an agreement regarding a reduction in rent or position of a rent free period
- prohibit landlords from charging penalty interest on late payments of rent.
Declarations made will cease to function either:
- the day the Public Health (Emergency) Declaration 2020 (No 1) (N12020-153) ends, including any extension of this (the declaration end date)
- if the Minister considers the effect of COVID-19 justifies a later date, which is not later than 3 months from the day the declaration end date, that day.
The Public Health (Emergency) Declaration 2020 (No 1) (N12020-153) came into effect on 16 March 2020 and has been extended 6 times as at 2 April 2020. This Declaration will continue to be extended until the ACT Government determines that the COVID-19 pandemic no longer requires a state of emergency.
If you have any questions or queries, or if you would like any assistance with these changes, please contact our Canberra property team.
Maddocks has produced guides to a range of legal issues raised by the coronavirus (COVID-19). You can access these guides here.
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