COVID-19 government incentives have been made available for QLD landlords of commercial properties with tenants impacted by the current global pandemic. This includes support for landlords to assist in managing commercial leases arrangements and financial obligations.
To help you develop a clearer understanding of the current COVID-19 government incentives available, the team at Johnsons Solicitors & Attorneys in Southport have put together a helpful guide below.
The COVID-19 government incentives explained
The Mandatory Code of Conduct: SME Commercial Leasing Principles During COVID-19 (the Code) outlines changes to the 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 the 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 the tenant
- Reductions in rent payable must be in the form of waivers and deferrals
- Rental Waivers must constitute no less than 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 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 proportionately with the tenant
- Penalties on tenants that stop trading or reduce trading hours are prohibited
Other COVID-19 government incentives
Banking support may be available for a loan repayment deferral. Businesses with a total loan amount of $3 million to $10 million can apply to defer loan repayments for 6 months. This is conditional on the landlord negotiating with the commercial tenant and not terminating the lease or evicting the tenant for rental arrears due to COVID-19.
QLD 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 assistance or advice on COVID-19 government incentives, please contact a member of our team on (07) 5571 1600. Based on the Gold Coast, the team at Johnsons Solicitors & Attorneys provides our services to local, interstate and international clients.