Commercial Leasing during Covid-19

NATIONAL CABINET MANDATORY CODE OF CONDUCT FOR COMMERCIAL LEASING PRINCIPLES DURING COVID-19

The National Cabinet released a mandatory code of conduct to impose a set of good faith leasing principles to commercial tenancies.

This Code applies to all tenancies that are suffering financial stress or hardship as a result of the COVID-19 pandemic as defined by their eligibility for the Commonwealth Government’s JobKeeper programme, with an annual turnover of up to $50 million.

Summary of key leasing principals effective for the duration of the COVID-19 pandemic period (or reasonable subsequent recovery period):

• Landlords must not terminate leases due to non-payment of rent.
• Tenants must remain committed to the terms of their lease (subject to any amendments negotiated under this Code).
• Landlords must offer tenants proportionate reductions in rent payable in the form of waivers and deferrals of up to 100%.
• Rental waivers must constitute no less than 50% of the rent payable.
• 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, whichever is the greater, unless otherwise agreed by the parties.
• Landlords must not draw on a tenant’s security for the non-payment of rent (be this a cash bond, bank guarantee or personal guarantee).
• Landlords agree to a freeze on rent increases (except for retail leases based on turnover rent).

We encourage a measured and balanced approach on a case-by-case basis, whilst taking into account both landlord’s and tenant’s particular circumstances when negotiating appropriate temporary leasing arrangements.

Here to help

For more details or advice on dealing with Commercial Landlord and Tenant issues, feel free to contact Heidi van Weeren on 9981 9400 / 0424 488 303 or email heidi@doylespillane.com.au

To read the Mandatory Code of Conduct, and JobKeeper Fact Sheet in full visit:

https://www.pm.gov.au/sites/default/files/files/national-cabinet-mandatory-code-ofconduct-sme-commercial-leasing-principles.pdf 

https://treasury.gov.au/sites/default/files/2020-04/Fact_sheet_supporting_businesses_0.pdf

Source: National Cabinet Mandatory Code of Conduct - SME Commercial Leasing Principles during COVID-19 / https://www.pm.gov.au/sites/default/files/files/national-cabinet-mandatory-code-ofconduct-sme-commercial-leasing-principles.pdf