{"id":5230,"date":"2020-04-30T13:44:12","date_gmt":"2020-04-30T03:44:12","guid":{"rendered":"http:\/\/www.www.walshaccountants.com\/?p=5230"},"modified":"2020-04-30T13:44:24","modified_gmt":"2020-04-30T03:44:24","slug":"commercial-landlords-covid-19-code-of-conduct","status":"publish","type":"post","link":"https:\/\/www.walshaccountants.com\/commercial-landlords-covid-19-code-of-conduct\/","title":{"rendered":"Commercial Landlords &#8211; COVID-19 Code of Conduct"},"content":{"rendered":"<p>The impact coronavirus\u2019 has had on Australian small to medium businesses has been severe. Social distancing and reducing non-essential travel has resulted in little to no patronage and reduced revenue for many businesses. Businesses are experiencing reduced cash flow and is impacting their ability to remain viable and pay fixed costs; such as rent.<\/p>\n<h2>Commercial Leasing Code of Conduct<\/h2>\n<p>The objective of the Code is to reduce the financial burden on the tenant ensuring rental costs does not compromise the small to medium business\u2019 ability to weather and recover from the crisis.<\/p>\n<p>The Code applies to tenants that:<\/p>\n<ul>\n<li>Have an annual turnover under $50million, and<\/li>\n<li>Are eligible for the JobKeeper Payment (decline in turnover &gt;30%)<\/li>\n<\/ul>\n<h2>Conditions on Landlords<\/h2>\n<p>The Code imposes the following conditions on Landlords:<\/p>\n<ol>\n<li>They must not terminate leases or draw on security deposits for non-payment of rent during the pandemic period or a reasonable subsequent recovery period.<\/li>\n<li>Landlords must offer their tenants a reduction in rent payable, up to 100%, based on the reduction in the tenant\u2019s trade.<\/li>\n<li>The rental reduction must include a minimum of 50% rental wavier (rent free) &amp; the remainder rent deferral. Tenants may wavier the requirement for a 50% minimum rental waiver (rent free) by agreement.<\/li>\n<li>The rental deferral must be repaid over the balance of the lease or over 24 months, whichever is greater, unless otherwise agreed by both parties. The tenant should be provided with the opportunity to extend their lease for a period equivalent to the rent reduced period. Landlords should be careful with leases that expire shortly after the end of the crisis as any deferred rental payments may be at risk.<\/li>\n<li>Landlords agree to freeze any rental increased for the duration of the pandemic and the subsequent recovery period. With the exception of retail leases based on turnover and any agreement between the parties.<\/li>\n<li>Landlords cannot apply any interest, fees or charges to the rent reduction nor any penalties for reduced operating hours.<\/li>\n<li>Landlords must pass on any reduction in charges or deferral of loan payments with the tenant in a proportional manner and where appropriate waive recovery of other outgoings.<\/li>\n<\/ol>\n<h2>Conditions on Tenants<\/h2>\n<p>The Code imposes the following condition on tenants:<\/p>\n<ol>\n<li>They must stay committed to the terms of the lease, subject to any negotiated amendments.<\/li>\n<\/ol>\n<h2>Mediation for Commercial Leasing Dispute<\/h2>\n<p>A failure to reach an agreement between the parties will be referred to the applicable states commercial leasing dispute resolution process for binding mediation.<\/p>\n<h2>Land Tax Reduction<\/h2>\n<p>The New South Wales and Queensland State Governments have announced they will both be providing a discount up to 25% on land tax for calendar year 2020 and a three month deferral on land tax\u2013 provided Landlords meet the terms of the Code.<\/p>\n<h2>Support from Banks<\/h2>\n<p>Australian financial institutions are expected, but not bound, to support Landlords.<\/p>\n<p><strong>Example:\u00a0<\/strong><\/p>\n<p>Tenant has turnover under $50m and is eligible for JobKeeper. The Tenant due to Coronavirus has experienced a 60% reduction in turnover.<\/p>\n<ul>\n<li>Minimum 60% reduction in rent\n<ul>\n<li>Minimum 30% Rental Waiver (Rent Free)<\/li>\n<li>Remainder Rent Deferral \u2013 recouped over at least 24 months (or otherwise agreed)<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><strong>In Conclusion:\u00a0<\/strong><\/p>\n<p>It is of some concern that potentially more burden is being places on the recovery of small to medium businesses on the backs of Landlords.<\/p>\n<p>Tenants should access all stimulus measures such as Employer Cash flow boost &amp; JobKeeper Payment to remain viable.<\/p>\n<p>However with open communication and a willingness to work together and potentially binding financial institutions to provide assistance, will see both tenants and landlords refresh, reload and relaunch from the current crisis.<\/p>\n<h3>How can Walsh Accountants Help?<\/h3>\n<p>If you&#8217;re a commercial landlord or tenant and you would like to discuss this issue, please do not hesitate to <a href=\"https:\/\/www.walshaccountants.com\/contact\/\">contact our office<\/a>\u00a0to speak with <a href=\"https:\/\/www.walshaccountants.com\/our-teams\/\">your Accountant,\u00a0\u00a0<\/a>or a specialists from our <a href=\"https:\/\/www.walshaccountants.com\/our-teams\/walsh-property-construction\/\">Property and Construction Team<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The impact coronavirus\u2019 has had on Australian small to medium businesses has been severe. Social distancing and reducing non-essential travel has resulted in little to no patronage and reduced revenue for many businesses. Businesses are experiencing reduced cash flow and is impacting their ability to remain viable and pay fixed costs; such as rent. Commercial [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":5232,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"sfsi_plus_gutenberg_text_before_share":"","sfsi_plus_gutenberg_show_text_before_share":"","sfsi_plus_gutenberg_icon_type":"","sfsi_plus_gutenberg_icon_alignemt":"","sfsi_plus_gutenburg_max_per_row":"","_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","_vp_format_video_url":"","_vp_image_focal_point":[],"footnotes":""},"categories":[14,62,66],"tags":[],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.4 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Commercial Landlords - COVID-19 Code of Conduct | Walsh Accountants<\/title>\n<meta name=\"description\" content=\"Objective of the Commercial Landlord Code of Conduct is to reduce financial burden on the tenant giving the business the ability to recover from COVID-19\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.walshaccountants.com\/commercial-landlords-covid-19-code-of-conduct\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Commercial Landlords - 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