Eight things we learnt from the PM's press conference about the proposed mandatory industry code for commercial leases
1. Watch this space
A proposed industry code for commercial and retail leases is coming. The National Cabinet and industry stakeholders have not yet agreed on the terms of the code as yet. The PM indicated he expects the code will be ready by Tuesday 7 April (or earlier).
2. Any agreement will be up to the parties
Both parties will need to use their best efforts to negotiate a mutually favourable outcome in good faith. The industry code will not be overly prescriptive.
The code will be mandatory. The PM expects it to be legislated in relevant State-specific legislation.
4. Limited scope
The code will only apply to commercial leases (including retail leases). It will only apply to tenants with revenue under $50 million, and that are participating in the JobKeeper program (tenants with a reduction of turnover of more than 30% due to COVID-19). The code will not apply to residential leases, and will only be in place while necessary.
5. Proportionality principle
Any agreement for a rent reduction will need to be proportionate to the tenant’s individual circumstances. The proportionate reduction in a tenant's turnover must be reflected in the rent reduction granted by a landlord. If a tenant's turnover is unaffected by the COVID-19 pandemic, there will be no rent reduction.
6. Tenant protections
Flagged protections afforded to tenants include prohibitions preventing evictions, terminations, and from being charged penalties (including interest on outstanding rent).
7. What about banks?
The PM expects that banks will need to work with landlords and tenants, even though they are not necessarily privy to leases or any proposed variations.
8. Working together
The key theme consistently highlighted by the PM has been that all stakeholders should come together to reach the best solution possible for all involved – and to share the heavy burden imposed by the crisis.
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