March 2020 | Scott Freidman 

On Wednesday, 25 March 2020, legislation came into effect giving the NSW Parliament powers to make new laws concerning residential tenancies in NSW to urgently address the unfolding health and economic crisis caused by the COVID-19 pandemic. The name of this legislation is the COVID-19 Legislation Amendment (Emergency Measures) Act 2020 (COVID-19 Act).

The COVID-19 Act is designed to enable the NSW Parliament to pass legislation urgently, as and when needed, to protect the welfare of tenants under the Residential Tenancies Act 2010 (NSW).

It must be stressed that the COVID-19 Act doesn’t yet alter the legal relationship between landlords and residential tenants. What it does provide to the NSW Parliament is the legislative vehicle to make changes in an expeditious manner and without certain of the requirements that normally attach to the passing of new laws.

However, in the current circumstances, we must assume there is a real possibility emergency laws will soon be passed which will impact landlord-tenant residential leasing arrangements.

Changes arising under the COVID-19 Act could prohibit landlords/owners (Landlords) from:

  1. Recovering possession of premises from a tenant – potentially this means a Landlord could be prohibited from taking possession for defaults that arose prior to the outbreak of the COVID-19 pandemic;
  2. Terminating any sort of tenancy arrangement including a residential tenancy lease – again, a Landlord may potentially be prohibited from terminating for defaults unconnected with the COVID-19 outbreak;
  3. Exercising the enforcement of other rights of the Landlord arising under the lease or under other legislation – potentially this could include Landlords’ rights to call on bank guarantees, cash deposits or other forms of security, rights to enforce trading obligations or to resist a rent abatement (many leases dis-entitle rent abatements whilst the tenant is in default).

The COVID-19 Act may also give the NSW Parliament the right to exempt tenants from the operation of a term of the lease or a right arising under another relevant Act. Such exemptions might apply for example, to the payment of rent, outgoings and other monies.

Because of the ‘emergency’ nature of these provisions, any potential regulations as discussed above will have what is called a six month ‘sunset clause’. This brings them to an end after six months unless resolved to be an earlier date by either House of Parliament.

There are a number of things the COVID-19 Act doesn’t contemplate:

  1. Relief to Landlords in terms of their positive obligations under a lease; and
  2. The implications for Landlords in terms of their continuing obligations to pay the costs and expenses normally attaching to a tenanted property and which may include rates, land tax and mortgage payments; and
  3. The nature of the flow-on rights and obligations of Landlords and tenants when the emergency measures come to an end

The National Cabinet is meeting again today (Friday, 27 March 2020). It is expected the Commonwealth and State Governments will announce further legal measures to regulate landlord and tenant legal arrangements in the near future. We will provide updates as and when these are announced.

Please do not hesitate to contact Jonathan Harris or Scott Freidman on (02) 9231 2466 if you have any questions in relation to the issues raised above or in relation to the legal arrangements affecting your property interests generally.