Not paying rent
If you are unable to pay your rent, support is available to help you understand your cashflow, options, and consequences.
Understand your position
Start by reviewing your lease including any obligations and associated costs.
Get a clear understanding of:
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your goals (e.g. keep trading/selling),
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your financial position,
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the challenges you are facing, and
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the impacts on your business.
Explore and evaluate your options to achieve your goals such as obtaining finance, asking to defer rent, selling assets or selling the business (if possible).
Important facts
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Governments do not provide cash to commercial tenants struggling to pay rent.
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QSBC mediators cannot mediate disputes about the amount of rent payable under the lease.
Top Tips
- Set goals and gather information for weighing up your options.
- Negotiating and mediating can save everyone time and money.
- Give specific dates and amounts you will pay to catch-up arrears.
Tenancy disputes
Tenants and lessors occasionally find themselves in dispute about a matter relating to the lease such as the condition or maintenance of the premises or ongoing works disturbing the businesses operations.
The QSBC provides access to low-cost mediation for retail and commercial leasing disputes up to $750,000 in value, including for maintenance or business disruption disputes.
It is not recommended to withhold rent during disputes as this may put you in breach of the lease. You should seek legal advice before withholding rent. Read our article Asking For Rent Relief if Commercial Property is Damaged or Unusable.
Consider engaging professional lease negotiators or legal professionals experienced in commercial leases to help negotiate and resolve disputes.
Tips to resolve issues
Talk to the lessor as soon as you become aware that you cannot pay rent.
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Talk to the lessor as soon as you become aware that you cannot pay rent.
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Respond promptly to property managers or lessors (communication is key).
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Prepare a proposal with specific detail of what you can pay and by when (seeking legal advice on how to reserve your rights).
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Provide supporting evidence and ask your lessor if you can discuss options.
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Make any requests in writing and ask the lessor to confirm receipt.
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Ask your lessor for a date you might expect a response or a decision to a proposal or request.
Struggling to pay rent
Information and support services can help you understand your options:
- Seek support from the Small Business Debt Helpline (1800 413 828)
- Access information on cash flow management
- Contact your bank’s financial hardship team
- Access free small business support services.
- Read our article Restructuring: a Lifeline for Small Business in Financial Crisis.
Ending a lease early
If tenants break the lease by ending it early (i.e. walks away), they may be liable for paying the remaining rent until the end of the lease term, and lessors might terminate the lease lawfully but be required to mitigate their losses by attempting to find a new tenant. Read our article Ending a Lease Early – What is in it for Either Party for more insights.
To avoid a potentially long and expensive process of breaking a lease agreement, you may consider other options such as:
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Selling the business
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Subleasing or a lease assignment
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Negotiating early termination
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Negotiating rent relief or deferring rent
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Voluntary administration or personal insolvency.
Consider impacts on any guarantors (the people (or other legal entities) who agree to be responsible for the debts of the tenant, should the tenant default).
Notice to Remedy Breach
If you do not pay rent, in accordance with the lease the lessor may issue you with a Notice to Remedy Breach (a Form 7 Notice) under the Property Law Act 2023 (the PLA). Read our breach notices fact sheet or article Form 7 Lease Breach Notices.
Lessors must consider the nature and extent of the breach, in determining the reasonable time for a breach to be remedied (PLA section 153(2)). If a tenant abandons the premises, the lessor may not need to give the tenant a Form 7 Notice or go to court to take back the property, but they must notify each ‘designated person’ (section 156). Read our article on changes to the Property Law Act in Queensland.
If the lessor fails to comply with the PLA when issuing a Form 7, a court may deem the notice to be invalid. An invalid notice is ineffective and would need to be reissued by the lessor.
Impact of inaction
More information
Contact the QSBC by submitting an online enquiry or calling 1300 312 344.
Download the Not paying rent fact sheet.