Proposed Rent Abatement Laws

While all eyes were fixed on the widely anticipated tax changes affecting all residential property investors, announced on the same day 28 September, the Government has also released their draft legislation on Commercial Rent Abatement Laws.

Here is the summary of what’s being proposed. 

1. Amend the Property Law Act 2007 to imply a “no access in an epidemic” clause into all existing leases that do not already contain an equivalent “no access in an emergency clause”.

2.  This clause will apply when:

   •  There is an epidemic  

   • Tenants are unable to access all or part of the leased premises to conduct their business due to the epidemic

   • The existing lease does not already contain a “no access in an emergency” clause

   • Parties have not agreed to an arrangement for rent abatement

3.  It simply requires landlord and tenant to agree to a “fair proportion” of rent and OPEX that will not be payable during the period of restricted or no access.

4.  It does not provide guidance on the % of abatement but merely requiring parties to enter discussion or arbitration if mutual agreement can’t be reached.

5.  If enacted, it will take effect retrospectively from 28 September 2021.

We are simply drawing your attention to this developing area. Please consult your lawyer for advice and to review your leases and determine how this proposed law change will impact you as commercial landlord or your business as tenants.