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The Federal Government has announced a 6 month ban on residential and commercial tenancy evictions for tenants who are unable to meet their rent payments due to financial distress resulting from COVID-19.

The government is yet to quantify a measure and instead has encouraged banks, landlords and tenants to work together during this period to ensure that viable businesses can survive and re-open when this is over.

For commercial tenancies, a number of principles were raised by the National Cabinet for landlords and tenants to consider, including:

  • Introduction of state legislation to support short term, temporary suspensions on evictions for non-payment,
  • Tenants and landlords encouraged to agree on rent relief or temporary amendments to their leases,

  • The reduction or waiver of rent payments for a defined period for impacted tenants,
  • The ability for tenants to terminate lease and/or seek mediation or conciliation on the grounds of financial distress,
  • Commercial property owners should ensure that any benefits received in respect to their properties should also benefit their tenants in proportion to the economic impact caused by coronavirus,
  • Landlords and tenants not significantly affected by coronavirus are expected to honour their lease and rental agreements,

The Australian Banking Association has previously announced it would allow landlords with less than $3million turnover to defer their loans for six months if they had been impacted by coronavirus. As a result of the most recent announcement they have agreed to loosen this definition to now include businesses with a less than $10 million turnover.

To access this deferral, commercial landlords must tell their banks that they have been affected by COVID-19 and satisfy the following:

  • Provide an undertaking to the bank that they will not terminate leases or evict tenants for rent arrears, during the period of interest capitalization.
  • Have existing facilities with them for 90 days prior to applying

Landlords should seek assistance from their financial institutions to discuss available options. More information can be found here: Banks to Help Landlords who Help Tenants

As tenancy law is governed by the state and territories, there are still further measures to be announced by the state governments in the coming days. However, NSW has already come to the table with measures to this effect. You can find specific information here NSW Parliament – COVID-19 Amended Bill

There is a number of complex matters to consider for landlord and tenant in this scenario and we recommend speaking to us prior to entering into any arrangements.

The Macro Team is ready to assist with any concerns, please contact us to discuss further.

Date Published: 30 March 2020

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