COVID-19: How The Proposed Commercial Tenancy Rules And Banking Packages Will Support Retailers
The government has proposed new measures to protect commercial tenants during the COVID-19 pandemic. These will be discussed at the National Cabinet tomorrow.
To take advantage of the proposed allowances, commercial tenants would need to be eligible for the government’s Jobseeker assistance and be a small- or medium-sized enterprise (that is, have turnover of less than $50 million).
The government has proposed that rent be reduced proportionally, in line with the decline in turnover, as this would ensure that the burden is shared between landlords and tenants.
In addition, landlords are expected to be prohibited from terminating leases for non-payment of rent, which would mean no lockouts or evictions.
Landlords would also be barred from charging interest on unpaid rent, making a claim to a bank guarantee or security deposit for non-payment of rent, and passing land tax on to tenant.
There would also be a freeze on rent increases, except for turnover leases, though landlords would likely struggle to find new commercial tenants in the current climate anyway.
However, the government also reiterated: “Where it can, rent should continue to be paid… tenants and landlords should negotiate a mutually agreed outcome.”
This comes on top of the industry-wide banking package, under which Australia’s major banks are allowing six-month payment deferrals to businesses loans of up to $10 million.
This measure covers 98% of Australian businesses and almost 90% of Australian commercial landlords. To access this relief, landlords must not move to terminate leases or evict current tenants for rent arrears caused by the COVID-19 pandemic and its subsequent restrictions.
“By deferring their loan repayments, we can provide support of up to $165 million in cash flow each month for our commercial property customers,” CBA CEO Matt Comyn said on the 30th of March. “Over the last fortnight we announced a number of measures to support our small business and retail customers through this very challenging period. It has become apparent over the last week that medium-sized and larger businesses will also need significant support.”
A number of major banks have waived or will be refunding merchant fees for three months, which should provide some relief for retailers in the months ahead.
On the 3rd of April, NAB reported that more than 50,000 personal and business customers had contacted the bank about accessing COVID-19 relief packages, such as the deferral of business loan repayments and the introduction of an unsecured business support loan up to $250,000.