COVID-19 The lat­est on com­mer­cial tenancies 

Fur­ther to our update on 26 March 2020 regard­ing the COVID-19 Leg­is­la­tion Amend­ment (Emer­gency Mea­sures) Bill 2020 (Bill), on Sun­day 29 March 2020, the Prime Min­is­ter announced that the Nation­al Cab­i­net agrees that short term inter­ven­tion is need­ed for com­mer­cial tenancies.

At this stage, there is noth­ing more than a set of over­ar­ch­ing prin­ci­ples agreed by the Nation­al Cab­i­net and announced by the Prime Min­is­ter in a press conference. 

It is assumed from the lan­guage used, and the exam­ples pro­vid­ed by the Prime Min­is­ter, that the ref­er­ence to ​“com­mer­cial ten­an­cies” includes com­mer­cial, retail and indus­tri­al leases.

The Nation­al Cab­i­net’s desired out­come is that, at the oth­er side of this COVD-19 cri­sis, a land­lord has a ten­ant in the premis­es who is pay­ing rent and the ten­ant has a viable business. 

We sum­marise the key prin­ci­ples agreed by the Nation­al Cab­i­net as follows: 

1. A six month, tem­po­rary mora­to­ri­um on the evic­tion of com­mer­cial and res­i­den­tial ten­ants for non pay­ment of rent is to apply to ten­an­cies impact­ed by rental dis­tress due to the COVID-19 crisis.
2. Com­mer­cial ten­ants and land­lords are encour­aged to sit down togeth­er and talk to each oth­er, to find a way through to the oth­er side of this COVID-19 cri­sis. This includes to agree on rent relief (rent waiv­er or reduc­tions) for a defined peri­od of time for ten­ants impact­ed by the COVID-19 crisis.
3. Ten­ants should be able to ter­mi­nate leas­es or seek medi­a­tion and/​or con­cil­i­a­tion on the grounds of finan­cial distress.
4. Com­mer­cial land­lords should ensure any ben­e­fits received in respect of their prop­er­ties are passed onto ten­ants in pro­por­tion to the eco­nom­ic impact caused by the COVID-19 crisis.
5. Land­lords and ten­ants not sig­nif­i­cant­ly impact­ed by the COVID-19 cri­sis are expect­ed to hon­our their lease and rental arrangements.
6. There is to be a cost shar­ing or defer­ral of loss­es between land­lords and ten­ants — with Com­mon­wealth, State and Ter­ri­to­ry gov­ern­ments, Local gov­ern­ments and finan­cial insti­tu­tions to con­sid­er mech­a­nisms to pro­vide assistance.

The key prin­ci­ples need for more detail from State and Ter­ri­to­ry Trea­sur­ers, who have been giv­en car­riage of this issue. The Prop­er­ty Coun­cil of Aus­tralia has flagged its ear­ly con­cerns with some of the key principles.

The Prop­er­ty Coun­cil of Aus­tralia has indi­cat­ed that the role of the finan­cial sec­tor is cru­cial in these arrange­ments and more detail from the bank­ing sec­tor is expect­ed imminently.

A copy of the Prime Min­is­ter’s state­ment deliv­ered in the evening of Sun­day 29 March 2020 is avail­able here.

More to fol­low as it comes to hand.

Kind regards

Swaab Prop­er­ty Team