Commercial tenants and landlords may be able to breathe a slight sigh of relief in the coming days, as PM Scott Morrison announced that a mandatory code is in the works, to help deal with the effects of the COVID-19 crisis.
In a press conference on Friday, Scott Morrison mentioned his governments expectations on a revised code for commercial leases throughout the country.
Morrison stated that he was hoping this new code will involve a formula which involves rental reductions in the case of hardship, on the part of the tenant. Therefore, rents could be scaled to match a fall in the revenue of a business.
This is welcome news for Sydney businesses with retail and commercial leases, which would otherwise need to be renegotiated or surrendered, at great cost.
Whilst Morrison said it has “not got to the point that we believe it needs to get to for sufficient security of tenants and landlords”.
“We would like, as a national cabinet, for this to be done by industry as quickly as possible,” he continued.
Morrison mentioned that the code “would have that protection of issues around evictions and claims on penalties and acting on guarantees”.
The code will aim to protect both the tenants and the landlords, taking into account businesses which are participating in the governments JobKeeper program. Moreover, it will ensure landlords are guarded against tenants terminating a lease in poor circumstances.
Morrison hopes that the code will encourage both landlords and tenants to meet halfway on any issues that my come up in the current climate, meaning a fair deal for both parties.
“Both of you — the landlord and the tenant — can get through this,” he stated. “What is important is that both parties act in good faith.”
Banks “will need to come to the party as well” for the code to be successful, Morrison added. Morrison continued that he expects the code to be finalised today (Tuesday) at the latest.
If you need to discuss your commercial lease situation with a qualified Sydney tenant advisory, get in touch with Niche Advisory here.
