Are you talking with your tenant or landlord? Here is some guidance
Many SMEs are currently wondering how they will make this month’s rent payment, not to mention future months! There is an enormous amount of uncertainty around being able to meet lease payments.
We are seeing some early deals being done and discussed. It can be a bit hit and miss, landlords and tenants alike have been somewhat confused.
We now have more clarity regarding rent waivers and deferrals with Scott Morrison unveiling a mandatory code of conduct.
Under the code, landlords will be required to reduce rent proportionate to the trading reduction in the tenant’s business caused by the coronavirus pandemic through a combination of waivers of rent and deferrals of rent.
Landlords must offer waivers of rent no less than 50 percent, while the balance must be in the form of a rental deferral.
The payment of the rental deferrals must be amortised over the balance of the lease term and for a period of no less than 24 months.
The SME tenants must also qualify for the JobKeeper program.
The code covers commercial tenancies including retail, office, and industrial, and will be eligible for SME tenants with an annual turnover of up to $50 million.
The code will come into effect in all states and territories from the 3rd April and will run for the period the JobKeeper program remains operational. Currently, this is for 6 months.
These types of arrangements preserve the lease and the relationship. It keeps the tenant in the property and in a lease, which is also good for the landlord by keeping the lease in place that underpins the value of those assets.
Landlords and tenants need to see this through together.
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