COVID-19 and Paying the Rent – Part 2 (the lock-down continues)

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Tim Dixon Special Counsel Linkedin

Read Part 1 to this blog: COVID-19 and Paying the Rent.

Back in April of this year – which seems like an eternity ago – we provided some advice (in an online webinar) for businesses occupying their offices under commercial leases about obtaining some rent relief in the forthcoming period of substantially reduced income.  At that time there was optimism that the pandemic was a short-term speed bump to be negotiated before we all got back to doing things the way they are supposed to be done.  By June we thought (or July at the latest) everything will be starting to get back to normal again.  If you are in Tasmania, Western Australia or Queensland, you could be approaching the light at the end of the tunnel – but if you are in NSW or Victoria, your outlook is perhaps bleaker than it was in April.

28 September 2020 – the big date!

That was thought to be the date by which we’d be putting the trauma behind us and tramping the road to recovery.  Not so, it appears.  So, what will happen after that?  There are a few things we do know and a lot we do not.

What we know

Perhaps somewhat precipitously in view of the current circumstances in Victoria and, to a lesser extent, NSW, on 21 July 2020, the Federal Government announced a modified extension of the Jobkeeper program would continue from 28 September through to 28 March 2021 – a further 6 months.  After 28 September, business will be required to reassess and re-qualify for Jobkeeper 2.  Eligibility will be determined by reference to the actual turnover in the June and September 2020 quarters and businesses will be required to demonstrate that they have sustained an ongoing and significant reduction in turnover for both quarters to be eligible in the December quarter.  To be eligible for Jobkeeper 2 in the March quarter, businesses must have sustained a decline in turnover for all three preceding quarters.

In addition, for the period from 29 September 2020 to 3 January 2021, the “flat rate” of $1,500 per fortnight for eligible employees, has been scaled back to $1,200 for “full time” workers and $750 for those working less than 20 hours per fortnight.

That scheme is to decrease further from 4 January 2021 to 31 March 2021 such that the fortnightly rate for “full time” employees will be $1,000 and $650 per fortnight for those working 20 hours or less.

What we do not know

Starting at the top of the food chain:


Although the major Banks were “leaned upon” by the Prime Minister and Treasurer to provide businesses with some relief from business loan repayments up to 28 September 2020, the Banks have been haemorrhaging money and so some substantial resistance to continuing the moratorium on loan repayments can be anticipated.  If some or all business loans resume interest payments (with potentially a component of arrears), it will result in substantially increased stress on many businesses.  The on-going attitude of Banks to a proposal to continue loan repayment relief is not yet clear.

The ATO – Whilst the taxman has been unusually lenient since the commencement of the COVID-19 crisis, there is no official announcement as to the ongoing stance of the ATO post 28 September 2020.


Most landlords have been the subject of a 6-month moratorium on evicting SME tenants, a freeze on rental increases and a negotiated waiver or deferral of rental payments in proportion to the reduction in the tenant’s income.  That has caused significant financial hardship for many landlords – both corporate and “mums and dads” – many of whom have needed to rely upon the Banks deferral of interest payments but have had little or no income for the period.  Most landlords have at least had on-going repairs, maintenance and insurance costs even if mortgage repayments and utility costs have been deferred.  However, whether the rent relief situation will continue in its current or a modified form is unknown.   If it does, it may be devastating for some landlords and if not, devastating for some tenants.


Again, it is not yet clear whether the extraordinary relaxation of the requirements for initiating personal bankruptcies and corporate winding up as a result of non-payment of debts will continue although it has been observed in the press that, statistically at least, many businesses which would otherwise have fallen by the wayside, have continued on even in these uncertain times because of the (artificial) protection afforded by the current circumstances.

Watch this space!

It is very difficult to predict where the rental situation will go between now and next March.  The only sure thing is that some further financial pain is inevitable for both landlords and tenants.

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Author: Tim Dixon, Special Counsel