A mandatory code of conduct outlines a set of good faith leasing principles for commercial tenancies including:
- other landlords
This code applies to tenants that are:
- a small to medium sized business with an annual turnover of up to $50 million
- eligible for the JobKeeper Payment
Rent reductions will be based on the tenant’s decline in turnover to ensure that the burden is shared between landlords and tenants.
The policy will include a mutual obligation requirement on the small and medium sized businesses and not-for-profit tenants to continue to engage their employees through the JobKeeper Payment where eligible, and if applicable, provide rent relief to their subtenants.
Australian and foreign banks, along with other financial institutions operating in Australia, are expected to support landlords and tenants with appropriate flexibility as they work to implement the mandatory Code.
The Government is also waiving rents for all its small and medium enterprises and not-for-profit tenants within its owned and leased property across Australia.
The code and its principles will be implemented and regulated by your relevant state or territory.
Principles of the code
The code includes a common set of 14 principles. These include that:
- landlords must not terminate leases for non-payment of rent during the COVID-19 pandemic (or reasonable recovery period)
- tenants must stay committed to their lease terms (subject to amendments)
- landlords must offer reductions in rent (as waivers or deferrals) based on the tenant’s reduction in trade during COVID-19
- benefits that owners get for their properties (e.g. reduced charges, land tax, deferred loan payments) should be passed on to the tenant (in the appropriate proportion)