Commercial tenancies that have been impacted by COVID-19 have been given new protections due to financial hardship. These protections apply to any commercial lease that was in place at 1 February 2020 or which commenced prior to 9 April 2020 and will be in place until at least 30 September 2020, unless the Treasurer determines an earlier date.
Can my landlord terminate my commercial lease for unpaid rent or other moneys?
Where a tenant has a business with a turnover of less than $50 Million and is also eligible for the Commonwealth Government’s JobKeeper Program (JobKeeper), that business cannot have their l lease terminated due to unpaid rent.
Can my landlord increase the rent on my commercial property?
A landlord cannot increase the rent of a commercial tenant where the tenant’s business has a turnover of less than $50 million and is also eligible for JobKeeper.
The only exception to this is for leases where rent payable is linked to the turnover of the tenant. A turnover rent is calculated on a tenant's retail sales which is often assessed as an amount on top of the base rent. Once the store's sales reach the turnover threshold in a particular period, a fixed percentage will then be applied to the revenue. Turnover rent leases are usually associated with leases in a shopping centre. If you are unsure whether your lease includes turnover rent you should talk with a lawyer.
Does the Federal Government Code of Conduct for commercial tenancies apply in Tasmania?
The Government has now introduced legislation for a Code of Conduct relating to commercial tenancies in Tasmania. This was announced by the Prime Minister on 7 April 2020.
What will the Code of Conduct do?
The Code of Conduct will do the following:
- prevent termination of a commercial lease for unpaid rent;
- prevent rent increases;
- allow for the waiver or deferral of rent and other charges; and
- ensure that relief provided by Government and financial institutions is shared by the parties.
The Code of Conduct will be supported by mediation arrangements. If parties goes to mediation they will be bound by the decision made in mediation in order to give tenants certainty as to any variation in their rent. A Code Administration Committee has also been appointed to promote awareness of the Code and monitor its application.
What does the Code of Conduct mean for commercial tenancies?
A key principle of the Code of Conduct is that losses associated with the reduction of turnover experienced by tenants as a result of COVID-19 should be shared between tenants and landlords. It applies to small and medium sized businesses with annual turnover up to $50 million and eligible for JobKeeper.
What type of commercial tenancies are included in the Code of Conduct?
- Retail
- Office
- Industrial
Who is the Code of Conduct between?
- Owners
- Operators
- Other landlords
- Tenants
How long will the Code of Conduct be in effect?
The Code of Conduct will be in place for the duration of the financial hardship period which is 1 April 2020 until 30 September 2020, unless changed.
Where can I go for more help?
Contact Consumer Building and Occupational Services: 1300 654 499 or go to their website.