Click HERE to view the fact sheet on Commercial leasing principles - COVID 19.

Click HERE to view the National Cabinet Mandatory Code of Conduct.




This Code applies to all commercial tenants that are suffering financial stress or hardship as a result of the COVID-19 pandemic.  
Hardship is as defined by SME eligibility for the Commonwealth Government’s JobKeeper programme: meaning a business or sole trader with an annual turnover of up to $50 million and whose turnover has been reduced by a minimum of 30% compared to the same trading month in 2019.
To be eligible, commercial tenants/businesses must register their interest in the scheme via the ATO website. We note that the scheme not compulsory, although businesses looking to provide financial support to their employees during the pandemic are required to register.
If a commercial tenants income has not been affected by Covid-19, they are required to pay your rent as normal.
Tenants must remain committed to the terms of their lease. Tenants who do not comply with the substantive parts of their lease will not receive protection under the code.
To be eligible, your tenant, must be able to provide proof they have been approved by the ATO for the JobKeepers programme and must be able to provide proof of the percentage income their business has suffered, before I can commence negotiations with you, their landlord. [Accountants should be able to provide the required proof.] 
Where a tenant has had a reduction in income from the same month in 2019 of 30% or more, then that reduction will be applied to their rent payable under the lease. 
For example, a business that has a reduced income of 30% is eligible for a 30% rent decrease and so on all the way up to businesses that suffered a 100% reduction in income.
The rent that is reduced or discounted must be treated in two ways: as a waiver of rent and as a deferral of rent.
Waivers must make up at least 50% of the rental reduction.Deferrals of rent (the other 50% of the reduction or more) must be spread out over the balance of the lease term or for two year; whichever is the greater, unless otherwise agreed by the parties.  If negotiated arrangements mean there is a future repayment of money then this should occur over an extended period in order to avoid placing an undue financial burden on the tenant. 
No repayment should commence until the earlier of the COVID-19 pandemic ending (as defined by the Australian Government) or the existing lease expiring, and taking into account a reasonable recovery period.
The tenant should be provided with an opportunity to extend its lease for an equivalent period of the rent waiver and/or deferral period.
Tom's a Hairdresser and pays rent of $5,000 per month.
The shop earned income in April 2019 of $20,000. In April 2020 it will only have income of $10,000; a 50% reduction in income because of COVD-19.Because his reduction in income is more than 30%, Tom applies for the JobKeeper program to help pay staff.
Tom is required to prove that he qualifies for the Commonwealth Government's JobKeeper Programme. The landlord is shown that Tom's income is 50% lower than the year before and agrees to reduce the rent by 50% to $2,500 a month.
Of the $2,500 reduced the landlord will waive $1,250 (50%) – meaning it never has to be paid.
The landlord then defers the other $1,250 (50%) – meaning it will remain owing to the landlord but will not generate an interest charge and will only be payable once the Covid-19 crisis is over.
Once the deferred rent amounts are due for payment, Tom does not have to pay it all back at once, he has a minimum of two years to make the payments of deferred rent*.If the reduced rent agreement lasts for six months, then afterwards Tom will have:
1. Had $7,500 in rent waived ($1,250 x six months)
2. Deferred $7,500 that is now payable
3. The deferred amount broken down to monthly payments over two years = $312.50 per month ($7,500 / 24 months)
4. Tom’s rent after the crisis is over is now $5,312.50 (his original $5,000 plus the deferred rent monthly payment)
*if Tom had more than two years left on his lease then the deferred rent would be broken down into payments in accordance with the term. So, a five-year term would be 60 months, three years 36 months etc. this would reduce the monthly payment payable by Tom on top of his regular rent once the crisis is over, as announced by the government.
Government rules for Landlords:
Landlords must not terminate leases due to non-payment of rent during the COVID-19 pandemic period (or reasonable subsequent recovery period).
Landlords must offer tenants reductions in rent payable in line with the percentage reduction in a tenant’s income and in the form of waivers and deferrals.
Must pass on to tenants any reduction in statutory charges (e.g. land tax, council rates) or insurance in proportion applicable under the lease.
A landlord should seek to share any benefit it receives due to deferral of loan payments from their bank/lender with the tenant in a proportionate manner.
Landlords should, where appropriate, seek to waive recovery of any other expense (or outgoing payable) by a tenant, under lease terms, during the period the tenant is not able to trade. Landlords reserve the right to reduce services as required in such circumstances.
Landlords cannot charge fees, interest or other charges should be applied with respect to rent waived and no fees, charges nor punitive interest may be charged on deferrals.
Landlords must not draw on a tenant’s security for the non-payment of rent (be this a cash bond, bank guarantee or personal guarantee) during the period of the COVID-19 pandemic and/or a reasonable recovery period.
Landlords agree to a freeze on rent increases (except for retail leases based on turnover rent) for the duration of the COVID-19 pandemic and a reasonable recovery period
Landlords may not apply any prohibition on levy any penalties if tenants reduce opening hours or cease to trade due to the COVID-19 pandemic.
The latest Government decisions will impact greatly on many of my commercial property owners. 
I particularly feel for self funded retirees and owners that rely on their rent as their only source of income.  If this does impact you in anyway, please give me a call so I can point you in the right direction for assistance. 
If you have any questions regarding this information or wish to discuss your particular situation please give me a call on mobile:   0418 504 855. [Please understand I am taking a high level of calls at the moment, if you leave a message, I will return your call.]
Stay safe.   

Nola Brown,

Mobile:   0418 504 855

Note:  Please note care has been take to provide accurate information, but please also consult your accountant and the ATO.