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Downloadable, printable JobKeeper pdf here
The new rental Code applies to tenants that are:
- small and medium sized business (SME) (annual turnover < $50 million) and
- eligible for JobKeeper Payment
The Code of Conduct (the Code) outlines a set of good faith leasing principles for commercial tenancies including:
- Retail, office, industrial
- Owners, operators, other landlords, tenants
Rent reductions are based on the tenant’s decline in turnover with the burden being shared between landlords and tenants.
The SME (tenant) must continue to engage their employees through the JobKeeper Payment where eligible, and if applicable, provide rent relief to their subtenants.
Worked examples – minimum for qualifying SME tenant (unless otherwise negotiated)
* Minimum required. ^^Could be lower, if higher rent free % offered, ## generally unless undue hardship
|Revenue drop %
||Rent free/ rent waiver *
Rent waiver ($)
||Rent deferral ^^
||Rent deferral (recouped over 2 years ##)
Qualifying tenants to be provided with cash flow relief in proportion to the loss of turnover they have experienced from COVID crisis.
E.g. 1 – An SME receiving the jobkeeper payment, with 60% loss in turnover would result in a guaranteed 60% cash flow relief.
– At a minimum, half (30%) is provided as rent free/rent waiver for the proportion of which the qualifying tenant’s revenue has fallen.
– Up to half (30%) could be through a deferral of rent, with this to be recouped over at least 24 months in a manner that is negotiated by the parties.
E.g. 2 – An SME receiving the jobkeeper payment, with 100% loss in turnover would result in at least 50% cash flow relief in rent free/rent waiver and the remainder as a rent deferral.
E.g. 3 – An SME receiving the jobkeeper payment, with 30% loss in turnover, would then receive at least 15% of total cash flow relief as rent free/rent waiver and the remainder 15% as rent deferral.
Care should be taken to ensure that any repayment of the deferred rent does not compromise the ability of the affected SME tenant to recover from the crisis. The parties would be free to make an alternative commercial arrangement to this formula if that is their wish.
This Code comes into effect in all states and territories from a date following 3 April 2020 (being the date that National Cabinet agreed to a set of principles to guide the Code to govern commercial tenancies as affected by the COVID19 pandemic) to be defined by each jurisdiction, for the period during which the Commonwealth JobKeeper program remains operational.
In negotiating and enacting appropriate temporary arrangements under this Code, the following leasing principles should be applied as soon as practicable on a case-by-case basis:
- Landlords must not terminate leases due to non-payment of rent during the COVID-19 pandemic period (or reasonable subsequent recovery period).
- Tenants must remain committed to the terms of their lease, subject to any amendments to their rental agreement negotiated under this Code. Material failure to abide by substantive terms of their lease will forfeit any protections provided to the tenant under this Code.
- Landlords must offer tenants proportionate reductions in rent payable in the form of waivers and deferrals (as outlined under “definitions,” below) of up to 100% of the amount ordinarily payable, on a case-by-case basis, based on the reduction in the tenant’s trade during the COVID-19 pandemic period and a subsequent reasonable recovery period.
- Rental waivers must constitute no less than 50% of the total reduction in rent payable under principle #3 above over the COVID-19 pandemic period and should constitute a greater proportion of the total reduction in rent payable in cases where failure to do so would compromise the tenant’s capacity to fulfil their ongoing obligations under the lease agreement. Regard must also be had to the Landlord’s financial ability to provide such additional waivers. Tenants may waive the requirement for a 50% minimum waiver by agreement.
- Payment of rental deferrals by the tenant must be amortised over the balance of the lease term and for a period of no less than 24 months, whichever is the greater, unless otherwise agreed by the parties.
- Any reduction in statutory charges (e.g. land tax, council rates) or insurance will be passed on to the tenant in the appropriate proportion applicable under the terms of the lease.
- A landlord should seek to share any benefit it receives due to deferral of loan payments, provided by a financial institution as part of the Australian Bankers Association’s COVID-19 response, or any other case-by-case deferral of loan repayments offered to other Landlords, 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.
- If negotiated arrangements under this Code necessitate repayment, 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 subsequent recovery period.
- No fees, interest or other charges should be applied with respect to rent waived in principles #3 and #4 above and no fees, charges nor punitive interest may be charged on deferrals in principles #3, #4 and #5 above.
- 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 subsequent 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 outlined in item #2 above. This is intended to provide the tenant additional time to trade, on existing lease terms, during the recovery period after the COVID-19 pandemic concludes.
- 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 subsequent recovery period, notwithstanding any arrangements between the landlord and the tenant.
- 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.
Australian and foreign banks, along with other financial institutions operating in Australia, are expected to support landlords and tenants with appropriate flexibility as they work to implement the mandatory Code.
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