After weeks of uncertainty, the National Cabinet announced last night a set of ‘principles’ to be used to assist landlords and tenants to navigate these unprecedented times. In making the announcement, the Prime Minister said that the responsibility remained with landlords, tenants and financial institutions to enter into meaningful discussions and work together “to ensure that, where possible, businesses can survive and be there on the other side”.
The Prime Minister set out the following principles:
- there will be a temporary short term (six month) moratorium on eviction for non-payment of rent across commercial tenancies (for those impacted by severe rental distress related to coronavirus);
- tenants and landlord are encouraged to agree on rent relief or temporary amendments to leases;
- rental payments are to be reduced or waived for a defined period for impacted tenants;
- tenants will have the ability to terminate leases and/or seek mediation or conciliation on the grounds of financial distress;
- commercial property owners should ensure that any benefits received in respect of their properties should also benefit their tenants in proportion to the economic impact caused by coronavirus;
- landlords and tenants who have not been significantly affected by coronavirus are expected to honour their existing lease and rental agreements; and
- it is the intention that the cost of deferral of losses should be shared between landlords and tenants, with Commonwealth, state and territory governments, local government and financial institutions to consider mechanisms to provide assistance.
While these principles are welcome and follow a common sense approach in these unparalleled times, without proper detail, the provision that a tenant has the ability to terminate a lease on the grounds of financial distress is concerning. We will be following the detail on this ‘principle’ with interest.
Like you, we await further details as to how these principles are to be applied which will hopefully come after Cabinet meets later today.
We remain committed to assisting you through these troubling times and encourage you to contact us to discuss your position and the options available to you.