07 April 2020 – A summary of the Prime Ministers announcement for Commercial Landlords and Tenants.
How does the code work?
The code will be mandatory, and includes the following set of principles:
- Landlords must not terminate the lease or draw on tenant security;
- Tenants must honour the lease;
- Landlords will be required to reduce rent proportionate to the trading reduction in the tenants business over the course of the pandemic, through a combination of waivers of rent and deferrals of rent;
- 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 12 months.
Please carefully consider how you will structure the rent relief package and legally document it. Both parties will need to work together and have open and frank discussions with the underlying principle being that ‘everyone shares some of the pain’.
The moratorium on evictions for a period of six months still applies.
Hopefully this provides some clarity to move forward.
Phil Carulli – Director