By now many of you will have received Fiona Sears’ Legal Alert titled Prime Minister sets out commercial leasing principles to assist landlords and tenants, which summarises the key points from Scott Morrison’s press conference last night relating to commercial leasing agreements.
Following the announcement, the Australian Banker’s Association issued a press release this morning headed Banks to help commercial landlords who help tenants through COVID19.
Here is a link to the full press release.
In summary:
- The threshold for loan payment deferrals for up to 6 months has been increased from $3 million to $10 million. Interest will capitalise on the loans.
- “During this period banks have also agreed to not enforce business loans for non-financial breaches of the loan contract (such as changes in valuations)”.
- The new measures will apply on an opt-in basis, meaning to access the package:
- commercial landlords will need to “provide an undertaking to the bank that for the period of interest capitalisation they will not terminate leases or evict current tenants for rent arrears as a result of COVID-19”; and
- customers will be required to advise their business is affected by COVID-19.
- The relevant Loan must be “current in terms of existing facilities 90 days” before applying. In this context we take this as meaning the loan must not have expired during those 90 days.
We’ll seek to provide updates as more information comes to hand and encourage you to contact us or your business banker to discuss your position and the options available to you.
