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Retail groups, landlords call for leasing code of conduct

Australia’s retail groups and shopping centre landlords have united in a set of retail leasing principles as they call for the implementation of a national Code of Conduct for retail leasing to facilitate a nationally consistent approach.

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The National Retail Association (NRA), Australian Retailers Association (ARA), the Pharmacy Guild of Australia (PGA) and the Shopping Centre Council of Australia (SCCA) have announced their shared commitment to ensuring business continuity in response to a common set of principles outlined by the Prime Minister relating to commercial leasing.

NRA CEO, Dominique Lamb, said, ““We sat down immediately after the Prime Minister’s announcement to come together in good faith and continue our ongoing discussions to ensure landlords and tenants are working together.”

ARA CEO, Russel Zimmerman, said, “Our industry has a track record of working together, including on challenging issues, and this is about working together and assisting policy makers in the next phase given our group’s longstanding engagement on retail leasing issues.”

PGA national president, George Tambassis, said, “Pharmacies are under immense pressure as frontline health resources during this COVID-19 crisis, and they need the certainty and consistency that can be provided by this Code.”

SCCA executive director, Angus Nardi, said, “Shopping centre owners and retailers have a mutual interest in business continuity and it’s positive to have a unanimous and timely approach to tackle the pressing challenges we all confront in the current environment in a way that is fair and balanced to everyone.”

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The Agreed Leasing Principles are outlined in brief below:

  1. Short term, temporary moratorium on eviction for non-payment of rent

This will be applied across commercial tenancies impacted by severe rental distress due to coronavirus. The SCCA has already agreed to non-termination for non-payment of rent for SMEs.

  1. Tenants and landlords encouraged to agree on rent relief or temporary lease amendments

Tenants and landlords are encouraged to agree on temporary rent assistance with the requirement that tenants provide financial data and other business information, so the lessor better understands the retailer’s capacity to pay. This would need to be considered on a case-by-case basis.

  1. The reduction or waiver of rental payment for a defined period

Rent assistance, including rent deferral, would be for a defined period, with a focus on non-essential SME tenants facing financial hardship as a result of COVID-19. This would also need to be considered on a case-by-case basis. Financial assistance could be based on the overall financial capacity of the retail in the context of its corporate group.

  1. The ability for tenants to terminate leases or seek mediation on the grounds of financial distress

The termination of leases is not supported with principles 2 and 3 considered more balanced and important for landlords and tenants to continue working together. Tenants should be able to seek mediation from Small Business Commissioners on the grounds of financial stress as a result of COVID-19 and reach a commercial outcome which ensures retailers resume trade and become financially viable within a defined recovery period.

  1. Commercial property owners

Any benefits received in respect of the properties of commercial property owners should also benefit their tenants in proportion to the economic impact caused by COVID-19. Governments should reduce statutory charges such as land tax and council rates, which will be passed on as relief for tenants during this period.

  1. Honouring lease and rental agreements

Landlords and tenants not significantly affected by coronavirus are expected to honour their lease and rental agreements. All parties should comply with existing leases, subject to the other principles.

  1. Cost-sharing or deferral of losses between landlords and tenants

Commonwealth, state and territory governments, local government and financial institutions should consider mechanisms to provide assistance in relation to rental relief.

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