A mandatory code of conduct for commercial leasing arrangements has been released by the Federal Government.

If a business qualifies for JobKeeper, (i.e., it can demonstrate reduction in turnover relevant to the entity type and size), then the business qualifies for commercial rent relief.

Evictions are not allowed for the next six months. 

The new code provides a combination of rent waivers and deferrals. The minimum rent waiver must be at least 50% of the total reduction in rent and the balance offered in the form of deferral. Payment of deferred rent must be amortised over the remainder of the lease term and for a term of no less than 24 months, or more depending on what is deemed reasonable by both parties. A landlord may choose to waive 100% of the rent, equally a lessee may choose to pay the reduced rent without deferring any payments.

Landlords must offer tenants reductions in rent proportionate to the reduction in trade the tenant has experienced. This is negotiated on a case by case basis.

The code requires landlords and lessees to negotiate in good faith new arrangements for the period of the JobKeeper program in order to facilitate resumption of normal business once the pandemic business hibernation period is over.

The code comes into effect from 3 April 2020 and will run for the same period as JobKeeper.

Tenants will need to provide accurate information to prove their financial position and eligibility for JobKeeper. Likewise, landlords must be open and honest in passing on any relevant reductions in their costs, such as rates or taxes, or any other benefits such as deferred loan payments, to the tenants.

If the landlord and tenant cannot reach agreement, they will need to approach the relevant State or industry body for advice or mediation.

For full details of the code, download SME Commercial Leasing Principles During COVID-19 .