Scott Morrison promises relief for struggling tenants amid coronavirus pandemic

Prime Minister Scott Morrison has revealed a new mandatory code of conduct will help protect commercial leases during the pandemic.

Businesses suffering from the devastating COVID-19 outbreak will receive some relief in the form of a new code of conduct for commercial leases.

In a press conference this afternoon, Prime Minister Scott Morrison said the idea behind Australia’s “hibernation strategy” was to allow us to “preserve as much of the foundations and pillars of the economy through this time” to enable us to “rebuild and regrow on the other side”.

“That means keeping jobs, keeping businesses, keeping tenancies in place, keeping loans in place and credit lines open … so on the other side of this crisis, the economy is able to rebound again,” he said.

Mr Morrison said preserving commercial tenancies was an important part of the wider economic strategy, and that as a result, a mandatory code had been agreed upon.

He said it would be “legislated and regulated as appropriate” in each state or territory’s jurisdiction.

The code will apply to either landlords or tenants who have experienced financial hardship of a result of the COVID-19 outbreak and who are eligible for the JobKeeper program.

It will apply to companies with a turnover of $50 million or less, meaning the code is mainly designed to protect small to medium enterprises.

Prime Minister Scott Morrison said the code would be mandatory. Picture: Gary Ramage

Under the code, “good faith leasing principles” will ensure landlords “must not terminate the lease” for a tenant or draw on securities, and on the flip side, tenants “must honour lease requirements”.

To achieve that, there could be “waivers of rent” or “deferrals of rent” over the course of the pandemic period, and rent must be reduced in proportion to the lost revenue of the business.

A binding mediation process will also be introduced, with landlords and tenants required to “sit down and work it out”.

Mr Morrison said the burden “must be shared” and that banks must also “come to the table”, including “international banks” which must “provide the same levels of support and co-operation we are seeing from Australian banks”.

He said the measures would help to preserve leases and the relationship between landlord and tenant, which would keep tenants in properties.

“This is seen as proactive, constructive co-operation between landlords and tenants – we will see this through together.”

But Real Estate Institute of Australia (REIA) president Adrian Kelly said it was disappointing that a uniform approach had not been agreed to for all Australians.

“We now face the potential situation where Australians will be treated differently depending on where they reside,” Mr Kelly said.

“This will add to the confusion and most likely there will be the misinterpretation of messaging.”

And Mr Kelly also called for greater clarity for residential tenants who had not been mentioned by the Prime Minister.

“For residential it is a social as well as economic impact – after all we all live in dwellings and not all of us either own or lease commercial property,” Mr Kelly said.

“REIA requests that further consideration be given to a national approach to residential real estate.”