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Effects of Covid-19 on Commercial Tenancies (current at 3pm, 3 April 2020)

Updated: Sep 30, 2020

This article covers the legislative position as at time of writing, Eastern Bridge’s recommendations to tenants and landlords and includes details of free deed of variation being made available to anyone who needs it.

This is update 1 of 9 - for our latest article on this topic see here.

Legislation to protect tenants (and landlords) who are coming under pressure as a consequence of the coronavirus outbreak continues to be pushed back.

National Cabinet had announced they would be considering and proceeding with rules in this regard on 24 March 2020. That discussion got pushed back and on 29 March 2020 Scott Morrison announced at a press conference that a moratorium on evictions would be brought in, and that measures to give effect to that moratorium would be taken by the states.

As at the time of writing no legislation has been passed to bring that moratorium into effect.

At his most recent press conference on 3 April 2020 the Prime Minister announced that key stakeholders continue to negotiate the terms of protective legislation. The legislation will (if this can be agreed – and the delay to date is not encouraging on this front) take the form of a compulsory industry code.

The Code will only apply where tenants meet the JobKeeper requirements – that is any tenant seeking to rely on the Code will need to have turnover of less than $50,000,000 and will need to demonstrate loss of revenue of at least 30% (generally that will be determined year-on-year from last year but there is discretion to consider other factors in determining whether revenue has dropped by 30%).

The proposal is that landlords and tenants will be free to negotiate the terms of relief in a manner that suits them, but with the intention that any agreement will reflect a rent waiver proportional to the loss of revenue suffered by the business as a consequence of coronavirus. It is important to note that this Code is yet to be agreed by industry stakeholders and national cabinet. There are significant competing interests at play – Phillip Coorey’s 2 April 2020 article in the Financial Review captures some of the difficulties being faced in reaching suitable resolution.

It remains to be seen what the Code will look like (if it can be agreed) and how quickly states will move to legislate to bring the Code into effect. We reiterate that until that happens the laws as they stand are no different to what they were prior to the coronavirus outbreak. We note the Prime Minister on 29 March suggested that any landlord acting in bad faith may be unable to take advantage of benefits that might otherwise be legislated – it remains to be seen whether legislation would retrospectively punish landlords who take action prior to the Code being legislated. The key takeaway for tenants and landlords is that the government does not propose prescribing precisely how any rent relief will look. That will be up to landlords and tenants to agree, acting reasonably.

It is critical that any agreement that is reached is properly documented. It is particularly important for landlords to ensure appropriate execution by any guarantor of the lease so as to maintain the enforceability of the guarantee as applying to the varied terms.

Eastern Bridge can assist in negotiating with your landlord or tenant, advising in relation to any dispute arising and documenting any agreed variation. Eastern Bridge will make a template deed of variation of lease available for free to anyone who requires it. If you would like us to send through template deed of variation please send an email to the writer: We do strongly recommend that you instruct us to either prepare or review the final form of deed of variation to ensure that it properly and effectively captures your agreed amended terms.

The writer will be hosting a free 1 hour webinar/question and answer session relating to issues affecting landlords and tenants at 8am, Tuesday 7 April.

Add your questions and comments in the session. Paul Nunan, accredited leasing specialist, will respond live.

Reserve your place:

Paul Nunan Director Accredited Specialist | Commercial Leasing -- this is the fourth of five updates; please see the most recent update here:


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