The National Cabinet has agreed to state and territory governments implementing a mandatory Code of Conduct relating to commercial leasing during COVID-19.
The purpose of the code is to impose a set of good faith leasing principles for application to commercial tenancies between landlords and tenants. It includes circumstances where the tenant is a small-medium sized business – with an annual turnover of up to $50 million – and fits the same criteria for the Commonwealth Government’s JobKeeper program.
The National Cabinet agreed on a proportionality to rent reductions based on the tenant’s decline in turnover to ensure that the burden is shared between landlords and tenants.
The code provides a proportionate and measured burden share between the two parties while still allowing tenants and landlords to agree to tailored, bespoke, and appropriate temporary arrangements that take account of their particular circumstances.
“This is seen as a proactive, a constructive and cooperative mechanism for landlords and tenants to see this through together,” Prime Minister Scott Morrison said in a statement.
“The code sets out the good faith leasing principles for these tenancies. It means that businesses will be able to emerge on the other side and start trading again, not weighed down by disabling debts that would otherwise keep their doors closed forever.”
The National Cabinet expects Australian and foreign banks, along with other financial institutions operating in Australia, to support landlords and tenants with appropriate flexibility as they work to implement the mandatory code.
The Commonwealth Government is also acting as a model landlord by waiving rents for all its small and medium enterprises and not-for-profit tenants within its owned and leased property across Australia.
The Rent Relief Policy will include a mutual obligation requirement on the small and medium sized enterprises and not-for-profit tenants to continue to engage their employees through the JobKeeper initiative where eligible, and if applicable, provide rent relief to their subtenants.
To view the full Code of Conduct, click HERE.