‘Mandatory code’ flagged for commercial tenancies
Commercial agents say more needs to be done as they welcome word of a “mandatory code” for dealing with rentals amid disputes between landlords and struggling business tenants.
Commercial tenancy disputes about rent relief could soon be guided by a “mandatory code” announced by the National Cabinet.
Prime Minister Scott Morrison called on small and medium business owners to negotiate with landlords, but said mediations would also be available if required.
The Friday announcement of more specific guidelines comes after numerous retail businesses have already applied for rent relief.
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W.B. Simpson and Son director Richard Simpson said he welcomed a clear code, after he had received 70 requests for commercial rent reductions from retailers, cafes, restaurants and offices across Melbourne.
“We’ve mostly been able to come to arrangements that last a short period of time, which both parties have been receptive to,” Mr Simpson said.
“But what landlords are screaming for is some state government relief on land tax, rates and other outgoings on these properties.
“I have landlords who are self-funded retirees wondering how they are going to pay these if they have to reduce rent. Some of them don’t know how they’re going to live.”
He said more specific guidelines were required about how to end a lease if a business was unable to reopen from financial hardship during the pandemic.
Real Estate Institute of Victoria president Leah Calnan said the guidelines would give “agents, landlords and tenants clarity” that they had been waiting for.
“I think both residential and commercial property managers have had challenging conversations between owners and tenants and we are hearing of some cases where requests for rent reductions haven’t been accepted,” Ms Calnan said.
“We’re encouraging everyone to pay rents if they can, but if there is a situation where parties can’t come to an agreement it can be referred to the small business commissioner.”
Realestate.com.au chief economist Nerida Conisbee said there had been a rise in distressed commercial listings, but banks were being accommodating with mortgage payments for businesses.
“Tenants are facing unprecedented times and we are seeing some businesses having to shut down, such as those in hospitality and tourism,” Ms Conisbee said.
She said there could be future economic flow-on effects that impacted hotels, office buildings, residential development sites and industrial properties like warehouses.
Retail veteran Solomon Lew has already told landlords Premier Investments he would not pay rent after shutting more than 800 stores amid increasingly stringent social distancing measures.
Mr Morrison said “tenants threatening to throw in the keys and walk away from leases” and landlords not taking calls from tenants was unacceptable.
“The priority has been on commercial tenancies … that’s where the National Cabinet has put its first attention,” Mr Morrison said.
“On residential tenancies, we’ve already announced a moratorium on evictions; that doesn’t mean there’s a moratorium on rents. We won’t have anyone thrown out of their homes.”
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Originally published as ‘Mandatory code’ flagged for commercial tenancies