COVID-19 Commercial Rent & Lease

Measures to help commercial tenants

The government announced on 3 April that a mandatory code of conduct for commercial tenancies will be developed and legislated by State and Territory governments. This will apply where the tenant is eligible for the Commonwealth government’s Jobkeeper assistance (see above) and is an SME with less than $50 million turnover.

The principles of the code will be:

  • Where possible, rent should continue to be paid. Where there is financial distress as a result of COVID-19 (eg, the tenant is eligible for assistance through the JobKeeper program), tenants and landlords should negotiate a mutually agreed outcome.

  • Rent reductions will be proportional, based on the decline in turnover, to ensure that the burden is shared between landlords and tenants.

  • Termination of leases for non-payment of rent (lockouts and eviction) during this period will be prohibited.

  • There will be a freeze on rent increases (except for turnover leases).

  • Penalties for tenants who stop trading or reduce opening hours will be prohibited.

  • Landlords will not be able to pass land tax to tenants (if not already legislated).

  • Landlords will be unable to charge interest on unpaid rent.

  • Landlords will not be able to lay claim to a bank guarantee or security deposit for non-payment of rent.

  • Red tape barriers to lease extensions will be removed, so that a tenant and landlord could agree a rent waiver in return for a lease extension.

To benefit from these conditions landlords and tenants will need to sign up to the code of conduct. For landlords and tenants that do so, State 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. Landlords must pass on the benefits of such moves to the tenants. Mediation will be available through existing State and Territory mechanisms.

A further announcement on the development of this code of conduct will be made following the National Cabinet meeting on Tuesday 7 April.

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