MANDATORY CODE FOR RENT RELIEF
The National Cabinet has agreed that states and territories will implement a mandatory Code of Conduct in the commercial property sector.
Summary of the Code is as follows.
To be eligible to negotiate under the code either party must:
- be a business that is in a position of financial distress;
- have a turnover of $50 million or less;
- be eligible to receive support under the JobKeeper program (meaning the business has experienced at least a 30 per cent drop in revenue due to Covid-19 restrictions).
Under the Code landlords must not terminate the lease or draw on a tenant’s security. Likewise, tenants must honour the lease agreement.
With regard to rent reduction, landlords will be required to reduce rent in proportion to the trading reduction suffered by the tenant. This will be achieved by a combination of waivers and deferrals of rent.
Waivers of rent must account for 50 per cent at least of the reduction in the rental provided to the tenant during that period while deferrals must be covered over the balance of the lease term and for no less of a period than 12 months. For example, if the lease term goes for three years the cost can be amortised over the three year period. However, if the lease only has another six months left to run then the tenant would still have a minimum of 12 months after the pandemic period to cover the deferrals of the rental payments.
Please contact Integrity One if we can assist you with this or any other financial matter.
Phone: (03) 9723 0522
Suite 2, 1 Railway Crescent
Croydon, Victoria 3136
This information is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Financial Planning activities only are provided by Integrity One Planning Services Pty Ltd as a Corporate Authorised Representative No. 315000 of Integrity Financial Planners Pty Ltd ABN 71 069 537 855 AFSL 225051. Integrity One Planning Services Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. Please consult your adviser, finance specialist, broker, and/or accountant before making decisions using this information.