The Federal Government has announced a rent relief package for commercial tenants affected by COVID-19. The package is a key part of the government’s hibernation strategy.
Under the scheme, landlords will be instructed to reduce their commercial tenant’s rent in proportion to the tenants lost revenue due to the impact of COVID-19.
A mandatory code will apply to tenancies including retail, office and industrial:
- where the tenant or landlord is eligible for the JobKeeper program
- where businesses have a turnover of $50 million or less.
The code will be rolled out and implemented in each state and territory and also stipulates:
- landlords must not terminate the lease or draw into a tenant’s security bond
- likewise, tenants must not terminate the lease.
The scheme will be implemented through a combination of rent waivers and deferrals. The waivers will have to account for 50% of the reduction in business and deferrals (payments that will need to be paid but can be put off) must be spread over the remaining lease term, but for no less than 24 months.
The purpose of the code is to impose a set of good faith leasing principles to commercial tenancies (including retail, office and industrial) between owners, operators, landlords and their tenants.
Prime Minister Scott Morrison said of the scheme: “This preserves the lease, it preserves the relationship, it keeps the tenant in the property.”
The National Cabinet also expects Australian and foreign banks, along with other financial institutions operating in Australia to support landlords and tenants with appropriate flexibility as the code is implemented.
Click here for more information.
This article was originally published on Business Australia here.