COVID-19 and the Commercial Property Market
National Cabinet Mandatory Tenancy Code of Conduct for Commercial Leases
Good faith principles for landlords and tenants to base rent relief negotiations. These principles are due to be legislated in Victoria at a special sitting of Parliament on 23 April.
Establish if tenant is entitled to Job Keeper stimulus package, if the qualify Code of Conduct applies
If tenant is entitled to Job Keeper they have demonstrated 30% loss
Based on a 30% loss landlord must waive 50% of the loss as rent waiver and the balance of the loss as a rent deferral (100% of the 30% loss to be offset - 70% of the rent remains payable)
To further clarify 100% any proven loss must be apportioned as a 50% waived and the 50% balance deferred over a period no early than 24 months-the expiry of the term
Leases can be extended for the same period of any relief
Tenants must honour their obligations under the lease
Tenants must provide financials to support any claim above 30% and must be suffering hardship
Landlords are unable to terminate leases or draw down on security
Landlords are unable to apply a rent increase during the pandemic period
Code also suggests other parties including banks and utility companies will assist each other based on these principles
Where landlords and tenants are unable to reach agreement the matter will be referred to mediation
We look forward to reviewing the legislation in detail in order to progress these claims and negotiations.
Reach out if you have any questions and remember this won’t last forever.
It’s good to see many businesses continuing to trade and thrive under these circumstances