Australian Government commercial leasing principles – as of 3rd April 2020
Posted on April 8, 2020 in News
A new Code of Conduct for commercial leases during the COVID-19 pandemic crisis
Key Points of the Code
The Government is imposing a set of good faith leasing principles for commercial tenancies and they come into effect from 3 April 2020.
They will apply to all tenancies that are suffering as a result of the COVID-19 pandemic as defined by JobKeeper programme, with an annual turnover of up to $50 million.
- Leases must not terminate due to non-payment of rent during the period (or reasonable subsequent recovery period).
- Tenants must remain committed to the terms of their lease. A material failure to abide by substantive terms of their lease will forfeit any protections provided to the tenant under the Code.
- Landlords must offer tenants proportionate reductions in rent in the form of waivers and deferrals of up to 100% of the amount ordinarily payable, based on the reduction in the tenant’s trade during the COVID19 pandemic period.
- Rental waivers must constitute no less than 50% of the total reduction in rental payments.
- Payment of rental deferrals by the tenant must be amortised over the balance of the lease term and for a period of no less than 24 months, whichever is the greater.
- Any reduction in statutory charges (e.g. land tax, council rates) or insurance will be passed on to the tenant in the appropriate proportion applicable under the terms of the lease.
