LONG AWAITED CLARITY FOR VIRUS-HIT COMMERCIAL TENANCIES
Long-awaited clarity for virus-hit commercial tenancies arrives
At its meeting today, the Board reaffirmed the targets for the cash rate and the yield on 3-year Australian government bonds of 25 basis points, as well as the other elements of the package announced on 19 March 2020 – https://bit.ly/3e2xVn2Statement by Philip Lowe, Governor: Monetary Policy Decision | Media Releases
At its meeting today, the Board reaffirmed the targets for the cash rate and the yield on 3-year Australian government bonds of 25 basis points, as well as the other elements of the package announced…
The compulsory code for commercial tenancies will be legislated under each state and territory jurisdiction, and actioned through a binding mediation process. Mr Morrison said the code aims to help tenants and landlords, who are in financial turmoil due to COVID-19, negotiate rental payments and maintain their relationship through the pandemic.
“What this does is it preserves the lease, it preserves the relationship, it keeps the tenant in their property and it keeps the tenant on the lease, which is also good for the landlord,” said Morrison.
The code will apply to tenancies where the tenant or landlord is eligible for the Jobkeeper program, and where there is an annual turnover of $50 million or less.
The landlord and tenant will be required to work together to come to a solution – tenants will need to continue to honour their tenancy agreement and landlords will not be able to evict their tenant.
Prime Minister Scott Morrison today announced the mandatory code for commercial tenants and landlords. Picture: Getty
Landlords will be required to reduce a tenant’s rent through a combination of rent waivers and deferrals over the pandemic period, which must be proportionate to the trading reduction of the tenant’s business.
“This is seen as a proactive, a constructive and cooperative mechanism for landlords and tenants to see this through together”, said Morrison.
Banks are also being urged to support landlords throughout this time – Morrison particularly called out international banks who will need to support Australian businesses in the same way that Australian banks are supporting them.