Practical implications on leasing
The COVID-19 pandemic has caused significant disruption and
uncertainty for both landlords and tenants to retail and commercial
leases. As a result, the Federal Government released a mandatory
code of conduct for commercial leasing. The code was adopted to
varying degrees by each state and territory through its own
legislation and regulations.
The legislation provides the processes for landlords and tenants
to negotiate and enter into temporary rent relief arrangements. A
fundamental principle of the legislation is that parties will
engage in rent relief negotiations in good faith. Importantly,
there are threshold requirements of a tenant before the legislation
applies, these relate to the maximum annual turnover and minimum
decrease in turnover of the tenant business (assessed at the store
level for franchisees and at the group level for retail
groups).
