Australia’s retail industry groups have applauded Prime Minister, Scott Morrison for announcing a national tenancy framework that reflects the code of conduct principles put forward for consideration by the National Cabinet.
The framework is targeted at SMEs, applying only to commercial tenancies where the tenant or landlord is eligible for the JobKeeper payment and has a turnover of $50 million or less.
Under the framework, businesses suffering a major downturn will be eligible to have their rents reduced by the same proportion as their revenue has fallen. This rental reduction will be a combination of at least 50% rent waiver and a rent deferral. Businesses will have a minimum of 12 months after the downturn to pay the deferred rent.
The Australian Retailers Association (ARA), National Retail Association (NRA), Pharmacy Guild of Australia (PGA), and Shopping Centre Council of Australia (SCCA) initially proposed a national code of conduct for retail leasing as part of a set of mutually Agreed Leasing Principles released by the groups on 31 March 2020.
Given retail leasing is regulated in each state and territory, the groups called for a nationally consistent approach, and efficient and timely application.
Dominique Lamb from the NRA said the model is sensible and proportionate. “It will ensure – to the greatest degree possible – that businesses who suffer a major downturn have the best chance of surviving, and that is good for both tenants and landlords. Just as we want to see businesses survive to keep employing their staff, property owners will also want to see the retail sector survive.”
Russell Zimmerman from the ARA said, “The Prime Minister and National Cabinet can be assured that the ARA and our retail industry colleagues will work to ensure the code is progressed and applied in good faith. The most important issue is that the industry is talking, and landlords and tenants are working together to ensure business continuity.”