PM unveils commercial rent relief strategy
After weeks of uncertainty, the Federal Government has revealed a national tenancy framework for commercial agreements in an effort to keep small businesses that have already shut down the best chance of surviving.
While not quite the rent freeze the retail industry was perhaps hoping for, businesses that have seen a major downturn in revenue will be able to apply to have rents reduced by a proportionate amount.
This rental reduction will be a combination of at least 50 per cent rent waiver, as well as a rental deferral. Affected business will have a minimum of 12 months after the fact to pay the deferred amount.
This framework will only apply to commercial tenancies where the tenant or landlord is eligible for the JobKeeper payment and has a turnover of $50 million or less.
According to the ABC, larger commercial landlords will need to call on banks to provide support.
Finance Minister Mathias Cormann said the government is trying to do its bit, and provide the right incentives, but that they expect landlords to do the right thing and help tenants.
“Depending on whether you’re the landlord or the tenant, your interests are not necessarily aligned,” Cormann told Sky News.
“We would say they should be in this context, and there should be scope for landlords and tenants to work through these issues with each other constructively, given the circumstances, [but] that’s sometimes easier said than done.”
In a joint statement the ARA, NRA, Shopping Centre Council of Australia and the Pharmacy Guild of Australia welcomed the code of conduct provided by the Government.
NRA chief executive Dominique Lamb said the announced model was sensible and proportionate, and would ensure that businesses have the best chance of survival.
“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,” Lamb said.
ARA executive director Russell Zimmerman said the government could be assured the industry bodies would work to ensure the code is applied.
“The most important issue is that the industry is talking, and landlords and tenants are working together to ensure business continuity,” Zimmerman said.
“[We] are all working towards the same goal – to emerge from the other side of this unprecedented experience with our retail partners, especially our SMEs, in the best possible position to succeed.”
This article first appeared on Inside Retail, a sibling website to Inside Franchise Business.