The Office of the Queensland Small Business Commissioner has now been officially open for business for a month. The Retail Shop Leases and Other Commercial Leases (COVID-19 Emergency Response) Regulation 2020 (the ‘regulation’) which empowered my office to open the doors and provide COVID-19 related small business leasing dispute resolution support and assistance was enacted on 28 May 2020.
Since then, my office has been contacted over 675 times* for information or dispute assistance from small business owners and their landlords located all over Queensland.
When the National Cabinet mandatory code of conduct for commercial leasing was announced by the Prime Minister in early April, the COVID restrictions had already resulted in closure for many businesses. This meant they could no longer afford to pay their rent. Some were fearful of eviction or dealing with other action being taken by their landlord. An almost equal number of distressed small business landlords had also sought advice and support.
That is why it was important to me that we hit the ground running and delivered immediate support, the moment the regulation was enacted. In fact, we locked in two mediation conferences within just 24 hours. Since then we have scheduled 17 mediation conferences*, and have helped resolve or settle 54 lease disputes*, bringing welcome relief and peace of mind to many small business tenants and landlords. In our first month, the success rate for resolving disputes at mediation has been 87%*.
The first mediation conference we arranged was for a motel business situated in Townsville. Coincidentally, this was one of the many businesses I had assisted through the North Queensland monsoon flood event last year in my previous role of Small Business Champion. It was such a relief when the dispute was successfully resolved at mediation. The owners have since told me that, due to the swift action of my office, they were saved from eviction and can now finally see a way through the COVID pandemic.
2020 has been the toughest year ever faced by so many of our 445,000 small businesses in Queensland. There continues to be a steady stream of businesses coming to my office for help which goes to show just how needed this service was.
I have also undertaken over 20 advocacy activities* on behalf of small businesses, strengthening the benefits and expanding on the value I was able to provide for small businesses in the previous role of Queensland Small Business Champion.
My new team has certainly seen a lot of action in this first month, and we have all learned a great deal. I thought I’d share some of our tips for small business that we have learned on the journey so far:
• The Small Business Financial Counselling Service is a valuable resource for many small business tenants and landlords. Did you know about this free service? Find out more here.
• The most visited page of our website is this one. In particular, the ‘process to negotiate leases under the regulation’ section, where we have simplified the regulation into five easy to follow phases of negotiation. Most of the enquiries we receive are resolved by using these phases.
• How much and what sort of information should a tenant be expected to give a landlord, to support their request for a rent reduction? My office has prepared a list of examples of what is generally considered ok to share, and what we believe is excessive. You can find our guidance material here under the ‘demonstrating financial impact (loss of turnover)’ section.
• We have discovered that the role of a mediator is often misunderstood. A mediator’s role is to facilitate the discussion and guide the parties towards a mutually acceptable agreement. It is not the mediator’s job to make a decision, or to tell a party what to do or say. You can read more about what to expect and how to prepare for a mediation here.
• If a landlord and tenant has successfully reached an agreement for a rent reduction it is important to document the key terms of what you have agreed. This can be as simple as an exchange of emails. The key things to document include the reduced amount of rent (including how much is waived and how much is deferred), if outgoings are payable – then what will happen with those, how long the varied arrangement will last, whether it is to be reviewed in the future, and what happens with rent that has been deferred (i.e. when repayments start, and how long the tenant has to pay it back). You can read more about the minimum elements to include in a rent reduction agreement here under the ‘making an agreement’ section.
The Office of the Queensland Small Business Commissioner can be contacted on 1300 312 344 or visit www.business.qld.gov.au/qsbc. Follow me on Facebook, Instagram or Twitter.
Queensland Small Business Commissioner
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*Statistics supplied are correct as at 23 June 2020