The Government recently announced support for commercial and residential tenants in financial stress and therefore unable to meet their commitments due to COVID-19. This includes a hold on evictions and a mandatory code of conduct for commercial tenancies.
Code of conduct for commercial tenancies
This code of conduct applies to retail, office and industrial tenancies who are small to medium sized businesses with an annual turnover of up to $50 million and eligible for the JobKeeper payment. Rent reductions will be based on the tenant’s decline in turnover to ensure that the burden is shared between landlords and tenants.
Principles of the code
Below are some of the principles of the code:
- landlords must not terminate leases for non-payment of rent during the COVID-19 pandemic (or reasonable recovery period)
- tenants must stay committed to their lease terms (subject to amendments)
- landlords must offer reductions in rent (as waivers or deferrals) based on the tenant’s reduction in trade during COVID-19
- benefits that owners receive in respect of their properties (e.g. reduced charges, land tax, deferred loan payments) should be passed on to the tenant (in the appropriate proportion).
More information about the relief available for commercial tenants can be found on the Government’s website.
General Advice Warning – The information in this article is educational and general in nature. It does not take into consideration your personal financial or taxation information, goals and objectives. Please ensure you seek appropriate financial and taxation advice.
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