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.

Key points

• 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