Which businesses are eligible for the commercial rent reduction? 


rent reductions for commercial tenants/businesses from landlords during covid-19

Featured | Small Business

By Loren Webb

State governments announced the commercial tenancy code of conduct last week, which aims to support businesses with commercial rent reductions. 

The code outlines a set of principles which tenants and landlords are expected to follow, along with Australian banks. It will be prepared for legislation this week. 

Is my business eligible for rent relief?

If your business has seen revenue loss since the coronavirus outbreak or has been shut down, you will be able to negotiate a rent reduction with your landlord.  

These new rules for commercial leases will protect companies with turnovers of up to $50 million and which are eligible for the JobKeeper payment.

The rent relief policy will include a mutual obligation requirement on businesses and not-for-profit tenants to continue to engage their employees through JobKeeper where eligible, and if applicable, provide rent relief to their subtenants.

What are the rent reduction principles?

  • No termination of leases 

Landlords must not terminate leases for non-payment of rent during the COVID-19 pandemic. This includes a ‘reasonable recovery period,’ which presumably covers the time when lockdowns are lifted. Tenants must also commit to their lease terms. 

  • Landlords must offer rent reductions

Landlords have to offer reductions in rent in line with the tenant’s reduction in trade and revenue during the COVID-19 pandemic. 

  • Landlord benefits must be passed on 

Benefits that commercial landlords may be receiving, for example such as land tax reductions or deferred loan repayments, should be passed on to the tenant in an appropriate amount. 

Mr Morrison and the state leaders urged banks and other lenders to support landlords and tenants with “appropriate flexibility.”

He has said, “My message to tenants, particularly commercial tenants, and commercial landlords, is a very straightforward one – we need you to sit down, talk to each other and work this out about looking at the businesses which have been closed, businesses that may have had a significant reduction in their revenues.”

The tenants’ union has argued, however, that governments need to step in to facilitate rent relief. 

New figures released by the Australian Bureau of Statistics show 38 per cent of businesses have renegotiated property rent or lease arrangements. 24 per cent have arranged to defer loan repayments.

The prime minister has already announced a six-month moratorium on evictions for people in financial distress and hardship.

The plan, which will cost about $7.6 million over six months, is expected to apply to cafes and restaurants, childcare operators, retail and local service providers, community organisations and educational institutions.

In its own sphere, the federal government has decided to waive rents for all small and medium enterprises and not-for-profit tenants within its owned and leased property across Australia.

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