Code of conduct for commercial tenancies
The Prime Minster has announced that the states and territories will legislate a mandatory code of conduct for commercial tenancies – see National Cabinet Mandatory Code of Conduct.
The code applies where:
- The landlord or tenant is eligible for the JobKeeper program, and
- They have a turnover of $50 million or less.
The code brings together a set of good-faith leasing principles. Landlords must not terminate the lease or draw on a tenant's security and tenants must honour the lease.
Landlords will be required to reduce rent proportionate to the trading reduction in the tenant's business, through a combination of waivers of rent and deferrals of rent over the "pandemic period." Waivers of rent must account for at least 50% of the reduction in the rental provided to the tenant during that period and deferrals must be covered over the balance of the lease term and in no less period than 24 months.
The arrangements are overseen through a binding mediation process at state and territory level.
Residential landlords and tenants
Most states and territories have introduced rules to ensure that tenants facing COVID related financial distress are not evicted for rental arrears.
Rent remains due, however landlords are encouraged to negotiate either a rent reduction to some degree or waiver where possible – for example, the landlord has a mortgage and has received a freeze on mortgage payments.
Most state and territory governments have free mediation services in place to manage disputes.
New South Wales
The NSW Government is introducing an interim 60-day stop on landlords seeking to evict tenants due to rental arrears as a result of COVID-19, together with longer six month restrictions on rental arrears evictions for those financially disadvantaged by COVID-19.
A household is COVID-19 impacted if:
· One or more rent-paying members of a household have lost employment or income (or had a reduction in employment or income) due to COVID-19 business closures or stand-downs, or
· One or more rent-paying members of a household have had to stop working or reduce work hours due to illness with COVID-19 or due to COVID-19 carer responsibilities for household or family members, and
· The above factors result in a household income (inclusive of any government assistance) that is reduced by 25% or more.
Notice periods for certain other lease termination reasons will be extended to 90 days.
All other tenants not impacted by COVID 19 are expected to honour their existing tenancy agreements.
See Six month moratorium on residential tenancy evictions during COVID-19.