The Federal Government has extended a lifeline to retail businesses struggling under the restrictions and challenges posed by Covid-19.
Announcing details of their Commercial Tenancy Code this week, which will need to be legislated and regulated within each state and territory, landlords will be required to talk through lease arrangements with tenants who fit the criteria to negotiate a rent reduction.
Businesses must be experiencing financial distress due to Covid-19, be eligible to receive JobKeeper support and have a turnover of less than $50 million to be eligible.
Landlords won’t be able to evict tenants or terminate a lease and both parties will engage in mandatory mediation to negotiate a proportional rent reduction via waivers or rent deferrals.
Any reduction would be calculated on the loss of businesses turnover by the tenant and tenants must still honour their lease.
The code applies to businesses under commercial tenancies for retail, office or industrial space and follows last week’s announcement of the Coronavirus SME Guarantee Scheme.
Under the scheme, the government will provide a 50 per cent guarantee of unsecured loans to small and medium sized enterprises to use for working capital to see them through the pandemic.
Open to all SMEs will a turnover of less than $50 million can apply for the loans up to $250,000, which will be for up to three years including a six month payment free period. Loans will not be subject to asset security offered by SMEs, but will be subject to lenders’ credit assessments.