Earlier this week Prime Minister Morrison provided further details on the relief available to retail and commercial tenants under changes made to the Commercial Tenancies Code. This Code provides the guidelines which will be then legislated into the relevant state laws shortly.

The Code seeks to provide an environment where landlords and tenants negotiate in good faith for a position that ensures the business is able to remain a tenant once the COVID-19 restrictions are lifted. A key to the success of this Code is the ability of landlords to negotiate with their lenders to get concessions on their loan repayments.

The Code applies to tenants of commercial or retail premises with turnovers less than $50 million that have suffered a 30% or larger drop in turnover and are eligible and either participating or will participate in the JobKeeper scheme.

The relief afforded to tenants should be a combination both of a waiver of rent as well as a deferral of rent. Waivers must be at least 50% of the reduction and any waivers must have a repayment period over 24 months. As such, for tenants with leases expiring in less than that period, they must be given a repayment period of 24 months. Landlords are forbidden from terminating a lease for non-payment and must also not dip into the bond paid by the tenant. However tenants are also expected to honour their obligations under the lease and cannot simply walk away from their rental commitments.

Additional information is likely to be released in each state when the relevant legislation passes but these guidelines give reassurance to tenants of their ability to negotiate with landlords to reduce their rental commitments. If you have any queries about this relief, please do not hesitate to contact us.