Coronavirus: Rent Relief to Tenants in Commercial Leases

 In Commercial & Property
Coronavirus: Rent Relief to Tenants in Commercial Leases

The Federal Government has today announced that there will be a mandatory Code of Conduct for all landlords and tenants in commercial tenancies across all states and territories as a result of the coronavirus (COVID-19) pandemic. It does not apply to residential tenancies.

The Code of Conduct will be legislated in each state and territory. The Code will apply to a tenancy where the tenant and landlord is eligible for JobKeeper payment and has a turnover of $50million or less. This Code will largely support small or medium enterprises.

The Code will include the following principles:

  1. Landlords must not terminate a lease, evict a tenant, or draw on a tenant’s security;
  2. Tenants must honour the lease; and
  3. Landlords will be required to reduce rent proportionate to the trading reduction of the tenants’ business in the course of the coronavirus (COVID-19) pandemic period. This reduction is to be through combination of waivers of rent and deferrals of rent. The waiver of rent will account for at least 50% of the rental reduction.  The deferral of rent (i.e. delay in the payment of rent) will be repayable over the balance of the lease term and in a period of no less than 12 months.

The landlord and tenant rental relief arrangements will be overseen through a binding mediation process. This process will be dealt with by each state and territory.

The legislation has not yet been enacted in South Australia and we will provide updates once it becomes available.

Johnston Withers Lawyers: Experience You Can Trust

Johnston Withers Lawyers will be closely monitoring these developments and providing regular updates. If you are a landlord or tenant and seek advice or direction on your legal rights, please contact Michael Stannard on (08) 8231 1110 or get in touch online.

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