RS COVID-19 Update: Commercial Tenancies

National Cabinet have agreed that a mandatory code of conduct will be developed for commercial tenancies, which is yet to be legislated.

This will be applicable to tenancies where the tenant is eligible for the Commonwealth Government’s JobKeeper assistance and is a small- or medium-sized enterprise (less than $50 million turnover).

Where it can, rent should continue to be paid, and where there is financial distress as a result of COVID-19 tenants and landlords should still negotiate a mutually agreed outcome.

In the proposed code of conduct, there will be a:

  • proportionality to rent reductions based on the decline in turnover to ensure that the burden is shared between landlords and tenants
  • prohibition on termination of leases for non-payment of rent (lockouts and eviction)
  • freeze on rent increases (except for turnover leases)
  • prohibition on penalties for tenants who stop trading or reduce opening hours
  • prohibition on landlords passing land tax to tenants (if not already legislated)
  • prohibition on landlords charging interest on unpaid rent
  • prohibition on landlords from making a claim to a bank guarantee or security deposit for non-payment of rent
  • any legislative barriers or administrative hurdles to lease extensions removed (so that a tenant and landlord could agree a rent waiver in return for a lease extension)

For landlords and tenants that sign up to the code of conduct, States and Territories have agreed to look at providing the equivalent of at least a three-month land tax waiver and three month land tax deferral on application for eligible landowners.

The proposed code of conduct will be discussed at the next meeting of the National Cabinet on Tuesday 7 April.

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