Following the National Cabinet meeting on Sunday 29 March 2020, the Prime Minister announced in a media statement a set of “principles” to assist landlords and tenants in commercial tenancies. The Government is encouraging commercial tenants, landlords and financial institutions to assist businesses to survive during these difficult times.
- There will be a short term (six month) moratorium on eviction for non-payment of rent across commercial tenancies (for those impacted by severe rental distress due to COVID-19);
- Tenants and landlords are encouraged to agree on rent relief or temporary amendments to leases;
- A reduction or waiver of rental payments for a defined period for impacted tenants;
- Tenants will have the ability to terminate leases and/or seek mediation or conciliation on the grounds of financial distress;
- Commercial property owners should ensure that any benefits received in respect of their properties should also benefit their tenants in proportion to the economic impact caused by Coronavirus;
- Landlords and tenants who have not been significantly affected by Coronavirus are expected to honour their existing lease and rental agreements; and
- It is the intention that the cost of deferral of losses should be shared between landlords and tenants, with Commonwealth, State and Territory governments, local government and financial institutions to consider mechanisms to provide assistance.
We welcome these principles that make practical sense in these uncertain times, however, obviously more details will be required, for example, for ability for a tenant to terminate a lease on the grounds of financial distress.
Updated statement by the Prime Minister – 30 March 2020
The Prime Minister stated that the National Cabinet had agreed to consider advice from the various Treasurers on commercial tenancy arrangements at a meeting on Friday, 3 April 2020.
Australian Banking Association (ABA) to assist commercial property landlords
As part of the ABA’s announcement of the banks’ commitment to support small business, commercial property landlords can also get relief as long as they provide an undertaking to their 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 the Coronavirus.