Commercial Rent Agreements COVID-19

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There are no winners in the commercial rent scenario, the tenants many of which have had to shut the doors nor the owners who have a loan and outgoings to pay. The federal government outlined what they expected was the right thing to do in a media release. Later they tied it to the JobKeeper eligibility requirements yet left it to each state to mandate.

We now have a Code of Conduct – https://www.pm.gov.au/sites/default/files/files/national-cabinet-mandatory-code-ofconduct-sme-commercial-leasing-principles.pdf

The objective of the Code is to share, in a proportionate, measured manner, the financial risk and cashflow impact during the COVID-19 period, whilst seeking to appropriately balance the interests of tenants and landlords. So what does this mean?

  • Landlords can’t terminate your lease
  • New agreements to rent payable is proportionate to the downturn of the tenant
  • Reductions in rent payable can be in the form of waivers (minimum 50%) and deferrals
  • Payment of rental deferrals by the tenant must be amortised over the balance of the lease term and for a period of no less than 24 months
  • No fees, interest or other charges should be applied with respect to rent waived

Good luck in your negotiations

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