Over the weekend the Prime Minister Scott Morrison announced an agreed set of principles that deals with commercial tenancies, which will be later legislated by the states and territories.
What are the agreed set of principles?
The agreed set of principles are:
- a moratorium (temporary suspension) on evictions over the next six months for tenants who are in financial distress and are unable to meet their commitments due to the impacts of COVID-19;
- tenants and landlords are encouraged to agree on rent relief or temporary amendments to the lease;
- the reduction or waiver of rental payment for a defined period for impacted tenants;
- the ability for tenants 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 COVID-19;
- landlords and tenants not significantly affected by coronavirus are expected to honour their lease and rental agreements; and
- cost-sharing or deferral of losses between landlords and tenants, with Commonwealth, state and territory governments, local government and financial institutions to consider mechanisms to provide assistance.
What practical steps can landlords and tenants take?
It is recommended that landlords and tenants immediately discuss ways forward, keeping in mind the above agreed set of principles, to come together to form workable solutions. It is also advised that all correspondence is kept in writing in case either party decides to make a claim.
What we can do?
At Chamberlains, our experienced Property Team can help both landlords and tenants in understanding their leasing obligations, and how to move forward in this ever-changing environment.