COVID-19 Fact Sheet
Last Updated 6 May 2020
This webpage contains information to help property owners and property users navigate through how to manage their commercial and residential tenancies.
Coronavirus is affecting everyone, but to differing degrees.
On 3 April 2020, the Federal Government released a National Cabinet Mandatory Code of Conduct (NCMCC), with the stated aim of imposing:
…a set of good faith leasing principles for application to commercial tenancies (including retail, office and industrial) between owners/operators/other landlords and tenants…
Access a handy flowchart we’ve prepared that summarises the NCMCC.
While applying to commercial property, the NCMCC principles are a basis for considering all leases – commercial and residential.
To assist property owners and users negotiate amended rental agreements pursuant to the principles outlined in the NCMCC, we’ve created this handy estimator / calculator.
To get it to work for you, simply answer the three ‘yes or no’ questions, and then input the normal (i.e. pre-COVID-19) rent and outgoings payable under the rental agreement, the percentage amount the property user’s turnover is estimated to have fallen because of COVID-19, and the % amount of the rent that the property owner is offering to waive (noting the NCMCC sets a minimum of 50% of the amount of any rental reduction, with the balance deferred).
If you have a question about the calculator then please raise it here (you will need to become a member first though).
The NCMCC was a document containing principles. In order for it to become binding legislation it requires each state or territory jurisdiction to pass its own laws. This has been done by altering legislation relating to property and tenancies to refer to regulations relating to COVID-19 changes.
Taking NSW as an example, they have broadly adopted the NCMCC principles, with a notable difference that it only applies to property users who qualify for JobKeeper rather than forcing the ‘spirit’ of the NCMCC on all affected businesses.
Here is a handy library of links to state and territory regulations (commercial property):
|NSW||VIC1 | VIC2||QLD*||WA|
* No regulation has been published yet.
The way that states and territories are governing rules in respect to COVID-19 and residential rental agreements is to amend tenancy laws to mention specific COVID-19 regulations.
Unfortunately, while most of the governing legislation has been amended, the regulations for almost all jurisdictions have not yet been published, which creates a vacuum in as to how landlords and tenants should negotiate.
Once notable exception is WA. Their regulations, that we think will form the basis of what will be adopted elsewhere, can be broadly summarized as follows:
- You can’t terminate a lease (a fixed tenancy that ends rolls over to a periodic tenancy). Some exceptions apply, the main one if it is a periodic tenancy and you want to sell it with vacant possession. We could not see moving back into the property as a valid reason to terminate.
- You can’t increase the rent. Any scheduled rental increase is not valid until after the regs end.
- If you experience financial hardship, you don’t have to maintain the property, other than urgent repairs.
- You and the tenant need to enter into an agreement about what rent is paid and when.
- There is no onus to waive any rent. What happens to rent that cannot be paid needs to be negotiated.
- If you can’t agree, you head off to the Commissioner for a determination.
- If an agreement is made and not honoured by the tenant, then you can apply to the Commissioner for the tenancy to be ended (after notice periods, etc.).
- Economic hardship is not defined, but details of economic hardship will need to be provided when going to the Commissioner. It does not seem like the tenant has to prove or provide anything to the property owner when claiming economic hardship.
- These regulations last until at least the end of September.
Here is a handy library of links to state and territory regulations (residential property):
*** Still reviewing the QLD regulations, but at first glance are similar to WA.
* No regulation has been published yet.
If you have any specific questions or need help with ideas or navigating through the COVID-19 consequences of a property you own or are thinking about buying, make a post here and we’ll do our best to assist: