The government has released initial details of how it proposes to handle commercial tenancies during the coronavirus. A summary of the details is below.

If you prefer to listen, a quick video is at https://www.loom.com/share/5e1502cad4e6486f9eec0f9f94e29c79

New mandatory code of conduct
A new mandatory code of conduct will be legislated by each state and territory. The federal government is providing the guide, but the states still have to enact it in the same way for it to be uniform across Australia.


Eligibility
Tenants must have a turnover of $50 million or less and be eligible for the JobKeeper program, meaning that they must employ staff and turnover must have declined by at least 30%.

What the code states should happen to rents – waived or deferred
Tenants should receive rent reductions in the form of either waivers or deferrals.

The code will include landlords not being able to terminate leases or draw on their tenants’ security, tenants honouring their leases and landlords reducing rent proportionate to the trading reduction of the tenant’s business.

Rent could be waived or deferred. Deferred rent must be covered over the balance of the lease term, but for no less than 12 months.


Need for negotiations

Tenants and landlords will need to negotiate and work out arrangements between themselves.

Mediation
The arrangements will be overseen by a binding mediation process administered by the state and territories.


Next Steps
Ensure you discuss with your landlord or tenant and wait for details of the legislation to be passed by your state government.