UPDATE 10 MAY:
On 7 May 2020, the Tasmanian Parliament passed the COVID-19 Disease Emergency (Commercial Leases) Act 2020 (the Act). The Act implements the Code of Conduct for commercial tenancies announced by the Prime Minister on 7 April 2020.
UPDATE 15 APRIL:
Consumer, Building & Occupational Services (CBOS) have created a page which provides an overview of the protections offered by the Code and includes the department's contact details if you need further information.
- Tenant is covered by the Code if they qualify for the JobKeeper wage subsidy payment.
- Tenant must have an annual turnover of no more than $50m.
- Code applies for the duration of the pandemic period and while the JobKeeper wage subsidy measure is operational, currently set at 30 March 2020 to 27 September 2020.
- Leases must not be terminated due to non-payment of rent during the pandemic period.
- Tenants must remain committed to the terms of their lease, subject to any amendments to their rental agreement negotiated under this Code. Material failure to abide by substantive terms of their lease will forfeit any protections provided to the tenant under this Code.
- Landlords must offer rent reductions of up to 100% ordinarily payable, in proportion to reduction in tenant’s trade, in two forms:
- At least 50% of the rent reduction must be a rent waiver.
- The balance must be a rent deferral, which is amortised over 2 years or the remaining lease term, whichever is the greater - unless otherwise agreed by the parties.
- The tenant should be provided with an opportunity to extend its lease for an equivalent period of the rent waiver and/or deferral period.
- Any reduction in statutory charges (e.g. land tax, council rates) or insurance will be passed on to the tenant in the appropriate proportion applicable under the terms of the lease.
- Landlords should where appropriate seek to waive recovery of any other expense (or outgoing payable) by a tenant, under lease terms, during the period the tenant is not able to trade.
- Landlords must pass on to tenants a proportionate share of benefits received from the deferral of loan payments.
- Landlords cannot charge fees or interest on waived or deferred amounts.
- Landlords cannot draw on tenants’ bonds.
- If negotiated arrangements under this Code necessitate repayment by the tenant, this should occur over an extended period in order to avoid placing an undue financial burden on the tenant. No repayment should commence until the earlier of the COVID-19 pandemic ending (as defined by the Australian Government) or the existing lease expiring, and taking into account a reasonable subsequent recovery period.
The Code requires landlords and tenants to negotiate in good faith and in a transparent manner, with customised case-by-case basis solutions for each tenancy encouraged. Where an agreement cannot be reached, the matter should be referred to the relevant body for dispute resolution for binding mediation.
The Code of Conduct is available here.
The CBOS fact sheet for Tasmanian commercial tenancies is available here.
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The content of this newsletter is general in nature. It does not constitute specific advice and readers are encouraged to consult their Ruddicks adviser on any matters of interest. Ruddicks accepts no liability for errors or omissions, or for any loss or damage suffered as a result of any person acting without such advice. This information is current as at 08 April 2020, and was published around that time. Ruddicks particularly accepts no obligation or responsibility for updating this publication for events, including changes to the law, the Australian Taxation Office’s interpretation of the law, or Government announcements arising after that time.
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