A number of commercial landlords were confronted during the COVID-19 lockdowns in 2021 with the need to provide their tenants with rental relief. This was in the form of:

• allowances on the paid to date or
• deferrals or waiving the rent in portion or whole

These options caused confusion for many property owners, and we have held significant conversations over the past 18 months.

So what is the actual difference between the options for commercial tenant relief?

Firstly, some First National Commercial landlords were obligated to allow for an adjustment to the date of when rent fell due and payable. For example, if a tenant was due to pay their rent on the 1st of the month, the owner had to allow for late payment based on several mitigating factors such as the tenants' drop in business or them waiting for government funds to clear.

This was largely done in good faith, between both parties, as any eligible tenancies opted for either a waiver or deferral.

Deferral

A deferral is a method of rental relief, whereby the rent does not have to be paid on its normal time schedule but must be paid back by the tenant in a time frame typically outlined by the legislation. In the most current scenario, an owner can seek repayment of deferred rent as of 15th January 2022. Upon the 15th of January, each tenant that has agreed to a level of the deferred rental will have to make additional minimum payments on top of the standard month's rental to repay the outstanding amount. The legislation allows tenants to make deferral payments back over either 24 months or the remaining tenure of the lease, whichever is greater. In some circumstances, this is applied differently, with smaller timeframes that are agreed to by both landlord and tenant parties.

Waiver

A rental waiver put simply, is the landlord agreeing to accept non-payment of the rent in its entirety or a portion of the normal amount, whilst forgoing the remaining balance portion.

The most recent legislation called for a combination of both, but with each of our client’s ability to work with our tenants, we have managed to see all landlords and tenants through these lockdowns, and look forward to a better and brighter future with you all.