Landlords of commercial properties with tenants impacted by COVID-19 can apply for various forms of relief that has been provided by the Queensland Government. Support has been made available for Landlords to assist managing commercial leases arrangements and financial obligations. The Mandatory Code of Conduct: SME Commercial Leasing Principles During COVID-19 (the Code) outlines changes to regulation of commercial leasing and includes principles that apply to certain commercial tenancies experiencing financial hardship due to the COVID-19 pandemic. The regulations guide landlords and tenants impacted by COVID-19 in their negotiations for temporary changes to leasing arrangements.
The parties involved must cooperate and act reasonably in good faith to mitigate the impact of the COVID-19 crisis for both parties. Government and banking support may be conditional on Landlords negotiating with tenants and allowing rental reductions and relaxing of rental obligations. The following principles apply when negotiation and enacting changes to the Lease:
- Landlord must not terminate leases over tenants’ non-payment of rent or outgoings
- Landlord must not increase rent payable by tenant
- Reductions in rent payable must be in the form of waivers and deferrals
- Rental Waivers must constitute no less that 50% of the total reduction of rent payable and cannot be recovered by the landlord over the term of the lease. Tenants may agree to waive the requirement for a 50% minimum waiver.
- Rent deferrals must be amortised by the tenant over the balance term of the lease and a period of at least 2 years.
- No interest or additional charges are to be made on unpaid rent
- Charges on outgoings such as statutory charges or insurance, must be reduced by the Landlord in an appropriate proportion applicable under the lease terms
- Charges of expenses by the tenant should be waived by the Landlord
- Landlords are prohibited from making claims on the tenant’s security deposit for non-payment of rent
- Landlord should allow the opportunity for the tenant to extend the lease terms for an equivalent period of the rent waiver or deferral period
- Landlord must share any benefit received for the deferral of loan payments in a proportionate manner with the tenant
- Penalties on tenants that stop trading or reduce trading hours are prohibited
Banking support may be available for loan repayment deferral. Businesses with total loan amount of $3 million to $10 million can apply to defer loan repayments for 6 months. This is conditional on Landlord negotiating with the commercial tenant and not terminating the lease or evicting the tenant for rental arrears due to COVID-19.
Landlords may be eligible for Land Tax Relief in the form of deferrals and rebates. Queensland Government has delayed issuing assessment notices for 2020-2021, deferring land tax liability for 3 months. Landlords can also apply for a land tax rebate to reduce liability by 25% for the 2020-2021 assessment year. Applications must be submitted by 26 February 2021.
If you require any assistance or advise, please contact a member of our team on (07) 5571 1600.