National Cabinet Mandatory Code of Conduct

The National Cabinet Mandatory Code of Conduct which will come into effect shortly, the specific date is not yet determined as this will be done on a state-by-state basis.  It sets out principles upon which Landlords must negotiate in good faith, rent waivers and deferrals to tenants with an annual turnover of up to $50,000,000.00 and those that are eligible for the Commonwealth Government’s JobKeeper program.  As the Code has just been published I thought I would forward it to you for your information.  There is a set of overarching principles, together with leasing principles, which provide amongst other things that:

  1. A Landlord must not terminate a Lease due to non-payment of rent.
  2. Tenants are to remain committed to the terms of a lease subject to the variation of rental.  If a Tenant otherwise fails to honour the terms and conditions of the lease then the rights to terminate the lease remain.
  3. Landlords must offer tenants proportionate deductions in rent payable in the form of waivers and deferrals and the rental waivers must constitute no less than 50% of the total reduction in rent payable. In the example if a tenant has closed and has no income then it is suggested it gets 50% rent waiver and 50% rent deferral, subject to the position of the landlord to offer this relief.
  4. Repayment of the deferred rent must be over a period of no less than 24 months.
  5. Landlords must pass on any reduction in charges e.g. land tax and council rates and benefits received from deferral of loan payments.
  6. Landlords must not charge any fees or punitive interest on the deferred rent amounts.
  7. Landlords must not draw on a tenant’s security or bank guarantee during the COVID-19 pandemic.
  8. Landlords agree to freeze rent increases for the duration of the COVID-19 pandemic.

If you have any queries regarding the above or are seeking advice please contact David McDonald at [email protected].

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