By Anica Cunanan, Law Clerk at Matthews Folbigg Lawyers
Undeniably, the financial impact of COVID-19 has triggered a myriad of changes to the laws. The National Cabinet has released a mandatory Code of Conduct in relation to the commercial property sector. This sets out the principles to be applied to adjustments to rent during the COVID-19 pandemic.
The Code is based upon a series of good faith principles to be applied to commercial tenancies during this unprecedented time. It will apply to those tenants who are eligible for the JobKeeper programme, with annual turnover of up to $50 million (“SME Tenants”).
The Code of Conduct includes the following:
- Landlords should not terminate due to non-payment of rent during the COVID-19 pandemic period;
- Proportionality to rent reductions based on the tenant’s decline of turnover;
- ‘Tailored’ and ‘bespoke’ solutions to be negotiates between landlords and SME Tenants; and
- A mix of at least 50% waivers and the balance of deferrals in respect of rent obligations.
These changes were agreed by the National Cabinet on Friday 3 April 2020. The balance of the Code will require some careful consideration.
In particular how these arrangements will work in practice remains to be seen, however there is now at least some structure for the negotiations to begin.
You can view the Prime Minister’s full statement here.
Our Property Team and our Commercial Law Team here at Matthews Folbigg Lawyers can help. Please do not hesitate to contact our team on (02) 9635 7966.