Struggling businesses with a turnover of less than $50 million will benefit from a mandatory code of practice revealed by Prime Minister Scott Morrison today.
The mandatory code will be legislated and regulated by each state and territory, and will apply to tenancies where the tenant or landlord is eligible for the JobKeeper program, and where they have a turnover of $50 million or less.
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How does the code work?
The code will be mandatory, and includes the following set of principles:
Landlords must not terminate the lease or draw on tenant security;
Tenants must honour the lease;
Landlords will be required to reduce rent proportionate to the trading reduction in the tenants business over the course of the pandemic, through a combination of waivers of rent and deferrals of rent;
Waivers of rent must account for at least 50 per cent of the reduction in the rental provided to the tenant during that period; and
Deferrals must be covered over the balance of the lease term, and in no less period than 12 months.
The arrangements will be overseen by a binding mediation process.
“The point here is simple,” the Prime Minister said.
“It's the same request we made of landlords and tenants about 10 days or so ago on this issue, and that is, that they sit down and they work it out.”
Morrison said the code will ensure the lease is preserved.
“It keeps the tenant in their property, and it keeps a tenant on the lease, which is also good for the landlord,” Morrison said.
It follows the Prime Minister’s announcement that all states and territories will place a moratorium on evictions of persons for six months.
Big banks’ mortgage relief
The big banks have offered home and investment property owners mortgage relief packages, ranging from three to six month repayment deferrals.
ANZ introduced six-month deferrals for home loan repayments, as did Commonwealth Bank.
Westpac home loan customers could apply to have their mortgage repayments deferred for an initial three months, and another three after a review process.
Will residential tenancies change?
Last week, the Prime Minister stressed that while the government has introduced a moratorium on evictions, where possible, tenants will still need to meet their rental payments.
“That doesn’t mean there is a moratorium on rental payments,” the Prime Minister said.
“It means that people are responsible for their rents, but there is a moratorium on evictions - we won’t have anyone thrown out of their homes. That’s very important,” Morrison said.
However, Morrison urged landlords to “do the right thing”.
“We are all in this together,” he said.
“Sit down with your tenant who has been paying you rent, working in their business week after week after week. Respect each other's livelihoods and support each other's livelihoods whenever you can.”
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