NEW COVID-19 INDUSTRY CODE FOR COMMERCIAL AND RETAIL LEASING
As you may have seen recently in the media, the PM has announced the introduction of a mandatory New Industry Code for Commercial and Retail Leasing as another policy implementation to deal with the financial fall-out of Covid19.
Whilst the finer details of what the roll out of the Code in Queensland will look like are yet to released, the PM has confirmed some essential features of the Code.
The Code will apply to leases where the tenant:
- has less than $50M turnover p.a; and
- has suffered a drop in revenue of at least 30%; and
- is eligible for the Jobkeeper Program.
The Code will provide for:
- both landlord and tenant to negotiate in good faith in respect of appropriate temporary arrangements (including rent concessions, deferment) necessitated by Covid-19;
- the prohibition on lease terminations by landlords due to non-payment of rent for the duration of the Covid-19 pandemic;
- mandatory rent waivers by landlords (equal to half of the percentage by which turnover has decreased) EXAMPLE : if turnover is reduced by 30%, then the percentage of rent to be waived is 15%;
- mandatory rent deferrals by landlords (equal to half of the percentage by which turnover has decreased) EXAMPLE: if turnover is reduced by 30%, then the percentage of rent to be deferred is 15%;
- repayment of rent deferrals by the tenant amortised over the greater of the remaining term of the lease and 24 months;
- a freeze on rent increases for the duration of the Covid-19 pandemic;
- waiver by landlords of tenant’s obligation to pay Outgoings during periods where the Tenant is unable to trade;
- the Code to apply from 3 April 2020.
No doubt more details will follow, and we will be across them when they do!
In the meantime, Landlords and Tenants should ensure that any temporary arrangements in respect of leasing comply with the Code. The good news is, we can help with that.
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