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On Thursday, 23 April 2020, a special sitting of the Victorian Parliament will convene to consider anticipated emergency legislation to address the coronavirus pandemic.

It is anticipated that there will be some respite for commercial tenants after the National Cabinet released the Mandatory Code of Conduct: SME Commercial Leasing Principles during COVID-19’ for small/medium enterprise “SME” tenants.

At-risk businesses struggling to make existing leasing arrangements will be given some leeway regarding their commercial tenancy to negotiate relief in the form of rental waivers and/or deferrals.

If you have any questions regarding your rights as a commercial landlord or tenant based on the Code of Conduct, contact our office today.

Who is eligible?

Most businesses who qualify for the recently announced JobKeeper stimulus package are covered in this legislation.

Businesses with an annual turnover of less than $50 million and who have at least a 30% decline caused by the pandemic will be in line for assistance.

Key principles of the Code

Landlords and tenants should work together in good faith to achieve an outcome that is appropriate for both parties, with the common goal of making a return to trade post-pandemic possible.

Consideration needs to be given to whether a company is in receivership or administration, and the application of the Code is to be modified accordingly.

Ultimately, landlords should be aware that they bear the risk of tenants defaulting on payments, and therefore must not seek extra measures (such as calling on security) to mitigate this risk.

All negotiations are to be done in an open, honest and transparent manner and in good faith.

How long will tenants be protected under the Code?

This is tied to the JobKeeper payment, which is anticipated to continue during the ‘pandemic period’ (tentatively set until 30th September 2020). The Code of Conduct will be in place for this same period.

To view a full copy of the Code of Conduct – SME Commercial Leasing Principles During Covid-19, click here.

Contact Us

If you have any questions regarding your rights as a commercial landlord or tenant based on the Code of Conduct, contact our office today.

SME Commercial Leasing Principles During COVID-19 legislation: what commercial tenants and landlords need to know about the new Code : City Pacific Lawyers

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