A short while ago, Prime Minister Scott Morrison said he hoped to have a mandatory code for commercial landlords and tenants in financial distress published next week. This should deliver the much anticipated and sorely needed financial relief commercial tenants have been waiting for.
The mandatory code will apply to tenants where they have a turnover of less than $50million and are part of the JobKeepers program. “The turnover reduction of the tenant needs to be reflected in the rental waiver of the landlord,” said Mr Morrison. He said for businesses that had to shut their doors for three months, the tenants and landlords could agree to extend the lease for three months at the end of the agreement to make up the lost revenue.
It is clear the Government does not want to be too prescriptive. “What we want to do is have tenants in the room.” That emphasises the need for landlords to take a realist approach. Most likely a proportionality test will be applied. For example, if a tenant has lost 30% of its trade, rent will be reduced by 30%. Tenants who have been forced to shut down may receive a total abatement.
Two days ago Henry William made a direct representation to the Federal Treasurer, Josh Frydenberg, calling for a temporary moratorium to prevent Landlords from cashing a tenant’s bank guarantee if they were unable to pay rent. It’s too early to tell if the code will contain such a feature but this issue should form a central part of any discussion between the parties to a commercial lease.
Henry William remain available to assist our Tenant clients experiencing financial hardship. Tenants who qualify for the JobKeepers program should immediately register.
The following persons can be contacted for advice between 9:00am and 9:00pm.
Ron Zucker +61 410 590 111
Alex Linden +61 404 821 471
Vincent Tripodina +61 408 228 108
Chelsea Woodward +61 404 065 899
Michael Mulvenna +61 424 622 174