COVID-19 Advo­ca­cy Alert 

Fur­ther to our updates on 26 March 2020 and ear­li­er today, the Prime Min­is­ter announced last night that the Nation­al Cab­i­net agreed to a mora­to­ri­um on evic­tions over the next six months for com­mer­cial and res­i­den­tial ten­an­cies in finan­cial dis­tress who are unable to meet their com­mit­ments due to the impact of coronavirus.

Today, the Aus­tralian Bank­ing Asso­ci­a­tion (ABA) has announced pro­posed mea­sures by banks to sup­port com­mer­cial land­lords who assist ten­ants dur­ing this COVID-19 pan­dem­ic. The two key mea­sures (sub­ject to the meet­ing the con­di­tions below) are: 

1. Busi­ness­es with total busi­ness loan facil­i­ties of up to $10 mil­lion (increased from the $3 mil­lion small busi­ness thresh­old) to be able to defer loan repay­ments for six months (facil­i­ties above $10 mil­lion will be con­sid­ered on a case by case basis); and 
2. Banks will not enforce busi­ness loans for non-finan­cial breach­es of the loan con­tract (such as changes in valuations)

These new mea­sures of relief will apply to all sec­tors of the econ­o­my, on an opt-in basis, pro­vid­ed that:

1. For com­mer­cial prop­er­ty land­lords, they pro­vide an under­tak­ing to the bank that for the peri­od of the inter­est cap­i­tal­i­sa­tion, they will not ter­mi­nate leas­es or evict cur­rent ten­ants for rent arrears as a result of COVID19;
2. the cus­tomer has advised that its busi­ness is affect­ed by COVID-19;
3. the cus­tomer was cur­rent in terms of exist­ing facil­i­ties 90 days pri­or to apply­ing for this relief; and
4. inter­est is cap­i­talised – that is, the term of the loan is extend­ed by the defer­ral peri­od pay­ments are increased after the defer­ral period.

These pro­posed mea­sures have not yet been imple­ment­ed, and are sub­ject to autho­ri­sa­tion from the Aus­tralian Com­pe­ti­tion and Con­sumer Com­mis­sion (ACCC).

The Nation­al Cab­i­net State­ment is avail­able here and the state­ment from the ABA is avail­able here.

Next Steps

Com­mer­cial land­lords should con­sid­er whether they are eli­gi­ble for the above relief and whether to apply for such relief, if and when it becomes avail­able (which is cur­rent­ly sub­ject to approval from the ACCC). A good start­ing point for com­mer­cial land­lords is to review cur­rent bank­ing facil­i­ties, to ascer­tain eli­gi­bil­i­ty.

The Nation­al Cab­i­net is expect­ed to meet again today, and we will pro­vide fur­ther updates as we work out this sit­u­a­tion, togeth­er with you.

Kind regards

Swaab Prop­er­ty Team