Banks to underpin new tenancy code

John Kavanagh
Westfield Doncaster, 11.30am Tuesday
Banks will be expected to provide support to commercial landlords under a COVID-19 tenancy code launched yesterday.

Announcing the code, Prime Minister Scott Morrison said: "Banks must come to the table and provide support to the landlords.

"I would particularly send that message to international banks operating in Australia, which are, in many cases, providing banking services to many larger landlords.

"We will expect those banks to be providing the same levels of support and co-operation that we are seeing from the Australian banks."

The tenancy code will be mandatory and will be legislated or regulated in each state and territory.

It will apply to tenancies where the tenant or landlord is eligible for the JobKeeper program (that is, in a position of distress) and where they have a turnover of A$50 million or less.

Landlords must not terminate the lease or draw on a tenant's security. They will be required to reduce rent in proportion to the trading reduction in the tenant's business through a combination of waivers of rent and deferrals of rent.

Waivers must account for at least 50 per cent of the reduction in the rent provided to the tenant during the crisis period.

Deferrals must be amortised over the balance of the lease or for a period of no less than 24 months, whichever is greater.

Tenants must honour the lease. Material failure to abide by substantive terms of the lease will forfeit any protections the code offers.

Arrangements will be put in place through a binding mediation process.

Morrison said: "This preserves the lease. It preserves the relationship. It keeps the tenant in their property and it keeps the tenant on the lease, which is also good for the landlord.

The Commonwealth will waive rents for all its small and medium enterprises and not-for-profit tenants in property it owns or leases.