Commercial tenancies rent relief package
On April 7, the Government announced new commercial rental waivers and deferrals for tenants that have been severely impacted by the coronavirus crisis.
The draft Code of Conduct is to impose a set of ‘good faith leasing principles’ and intended for landlords and tenants to share a proportionate financial risk and cashflow impact during this period of crisis. The code will apply to any small-medium sized tenancies where the tenant is eligible for the JobKeeper program and where they have a turnover of $50 million or less.
Under this relief package, landlords must not terminate a lease due to non-payment during the COVID-19 period and tenants must remain committed to the terms of their lease agreement.
Landlords must offer tenants proportionate reductions in rent payable as either waivers or deferrals of up to 100%, which is based on the reduction in the tenant’s trade throughout this crisis period and recovery.
Waivers will have to account for at least 50 per cent of rent payable, or greater in cases where it would compromise a tenant’s capacity to fulfil their ongoing obligations. Consideration must also be given to the Landlord’s ability to provide the additional waiver. Tenants may also waive the requirement for a 50% minimum waiver by agreement.
Rental payments will need to be made, but can be deferred to a later date, with payment amortised over the remaining term of the lease and for no less than 24 months, whichever is greater.
While the package is encouraging landlords and tenants to work together, where agreement on leasing cannot be reached, the matter can be referred on to applicable state retail/ commercial leasing dispute resolution processes.
We encourage you to speak to your landlord, tenant or the bank, and if you need assistance in regards to your financial situation, please don’t hesitate to give us a call.