Commercial Leasing Impact of Covid-19
Prime Minister Scott Morrison announced a mandatory code of conduct for commercial leasing.
The Code reflects the Government’s ‘Hibernation Strategy’ directed at preserving the foundations of our country’s economy, enabling us all to rebuild on the other side of this crisis.
Is your business eligible?
The code of conduct will apply to tenants that are eligible for the JobKeeper program. That is, you have:
- a turnover of $50M or less; and
- suffered a reduction in turnover of 30% or more.
What it means for your business
The code of conduct will prohibit landlords from terminating leases due to non-payment of rent.
It will also require landlords to reduce the rent payable under the lease proportionate to the tenant’s reduction in turnover, for the duration of the pandemic.
That rental reduction is:
- 50% deferred, to be repaid over the balance of the lease term or a period of at least 24 months, whichever is greater; and
- 50% waived by the landlord
For example, if your rent is $10,000 per month, and your turnover has reduced by 30%, your rental payments can be reduced by $3,000 immediately. The discount includes a $1,500 contribution from your landlord, with the remainder of the discount repaid to your landlord over time.
There is a freeze on rental increases and landlords cannot charge interest on unpaid rent.
Both landlords and tenants will need to sit down together and to negotiate in good faith to strike a resolution appropriate for their individual circumstances.
Rental impact calculators have been made available, check out our link here.
And while you’re speaking with your landlord, why not let them know you’re investigating going solar with Snowater?