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:
- A Landlord must not terminate a Lease due to non-payment of rent.
- 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.
- 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.
- Repayment of the deferred rent must be over a period of no less than 24 months.
- Landlords must pass on any reduction in charges e.g. land tax and council rates and benefits received from deferral of loan payments.
- Landlords must not charge any fees or punitive interest on the deferred rent amounts.
- Landlords must not draw on a tenant’s security or bank guarantee during the COVID-19 pandemic.
- 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].