Asking for rent relief if commercial property is damaged or unusable
Understand what applies in your situation
Between 2023 and 2025, repairs and maintenance were the most common disputes brought to the Queensland Small Business Commissioner (QSBC), accounting for at least 25% of cases every year.
Key issues in dispute included air conditioning, leaky roofs, and mould. These disputes often stemmed from unclear lease terms and challenges in determining responsibility.
Negotiating practical and workable outcomes is critical to help tenants and landlords resolve these types of disputes, avoid lengthy legal battles, and focus on running their businesses.
Understanding your lease is a crucial first step. You should seek advice as to whether the Retail Shop Leases Act 1994 (particularly sections 42, 43 and 43AD and section 44) and/or the Property Law Act 2023 (potentially Schedule 1 (item 4) applies to your situation.
You should Seek Legal Advice and read our article about changes to the Property Law Act in Queensland.
Gather evidence, prepare a proposal
If you believe you are entitled (under your lease or legislation) to rent relief (also known as a rent abatement), then put a proposal to the landlord, their agent or the shopping centre manager for consideration. This is usually the first step in negotiating an agreement on rent relief or compensation.
- Notify the landlord of the damage or loss of access in writing as soon as possible.
- Take (and send) photos and videos of the whole premises (needed to calculate the area that is usable vs unusable).
- Find and keep the receipts for any damaged goods for potential insurance claims.
- Get expert evidence or reports to record the damage and causes. Get any reports or advice in writing especially if the impact is invisible – e.g. bad smells, loss of electricity or equipment failure.
- Seek help in calculating the loss and/or reduction in rent that you will ask for (call your accountant or if in financial hardship – the Small Business Debt Helpline on 1800 413 828 who may assist in calculations). This step creates a justifiable calculation of the figures in your proposal.
- Send a proposal to the landlord or agent in writing with your evidence and state a reasonable time you’d expect to get a response.
- Prepare to negotiate and if that fails apply for mediation with the QSBC.
The Queensland Small Business Commissioner (QSBC) cannot determine if rent abatement or compensation applies or determine the amounts. Applying for mediation with the QSBC is the first step in the dispute resolution process under the Retail Shop Leases Act 1994 for determining the amount of compensation (section 44).
Wondering ‘Do I have a retail shop lease?’ then read our article What is a Retail Shop Lease in Queensland.
If you cannot negotiate an agreement on the amount of abatement or compensation, the evidence you have gathered and your calculations will help a court or tribunal decide whether rent abatement or compensation applies. It is important to note:
- Courts and Tribunals do not usually make their own calculations or investigations in civil matters.
- Courts and Tribunals rely on parties to present their own calculations and evidence and then decide whether they are valid.
Rent abatement compared to loss of stock or damage to fit out
When you look through your lease and seek legal advice, you should confirm whether you are required under your lease to have appropriate insurance for your stock or fit out. The Queensland Small Business Commissioner (QSBC) has seen the majority of leases contain a clause requiring the tenant to insure against damage to their stock or fit out. This may limit the lessor’s liability to pay compensation for replacement of stock or damage to equipment/fit out even if the damage is the result of a failure of something that may be under the lessor’s responsibility (for example: a leak in the roof). Each situation is different, and therefore getting expert advice on your lease is critical.
There are other articles related to this topic available by searching online.
Commercial property unusable due to safety concerns
The below information is taken from this fact sheet from LegalAid Queensland. The above information and this article is not intended as legal advice: LegalAidQLD_commercial_and_retail_leases.pdf:
“What if access to the building is prohibited or the building is unusable because of safety concerns?
“In the case of a multi-tenanted building, the leased premises may not be damaged or destroyed (such as in the case of an office building), but access may not be possible or the premises not useable for a period of time, mainly due to safety concerns (eg damaged fire safety systems or damaged services). If there is no damage to the building, the damage and destruction clause, discussed above (in the fact sheet), will not apply.
Therefore, an abatement of rent will only be possible if the lease expressly provides for abatement in the case of access or essential services to the building being interrupted by natural disaster or by agreement with the landlord. Likewise, the tenant will not be entitled to terminate the lease unless:
- the lease contains an express right to terminate in this type of circumstance or
- the landlord guarantees access to the building (unlikely) and the landlord has failed to take reasonable steps to ensure access is restored within a reasonable time or
- the landlord’s conduct has negligently increased the loss or damage to the tenant so that there is a breach of the covenant for quiet enjoyment (failing to reconnect air-conditioning within a reasonable time of gaining access to the building; failing to properly maintain the property prior to flooding which increased the damage or loss); this will require clear evidence of the landlord’s negligence or
- the inability to access the property is for such an extended and unreasonable period, having regard to the remaining period of the lease, that there is a frustration of the lease. This is an unlikely result and would require a significant and extended period of delay in access.”
To discuss your situation, and get connected with people that can help, reach out to our Assistance team.
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