On Sunday, the National Cabinet announced its principles for relief for commercial tenants, including a moratorium on eviction for non-payment of rent for commercial tenants in financial difficulty due to COVID-19.
The principles agreed by the National Cabinet include:
- encouraging negotiation of rent relief or temporary changes to leases;
- reducing or waiving payment of rent for a specific period;
- allowing affected tenants to terminate leases or seek mediation on the basis of financial distress;
- encouraging or ensuring that commercial landlords pass on benefits received in respect of their properties to their tenants in an economically proportionate way;
- expectations that landlords and tenants who are not significantly impacted by COVID-19 will honour lease agreements; and
- the sharing of costs and losses between landlords and tenants, with the support of Federal, Territory and State governments, local governments and financial institutions.
The Victorian Government is yet to release specific details on how these measures will apply.
What should landlords and tenants do?
For landlords, if a tenant seeks rent relief or changes to the lease, it is important to consider the above principles before responding to a tenant’s request.
These principles will likely guide laws to be enacted by the Victorian Government.
For tenants who are significantly impacted by COVID-19, the principles should inform any proposal for appropriate relief presented to your landlord.
KCL Law’s Property team can assist in:
- reviewing the parties’ rights and obligations under the lease in light of the principles;
- for landlords, preparing an appropriate response to a tenant’s request for relief;
- for tenants, formulating an appropriate proposal seeking relief; and
- for both landlords and tenants, properly documenting any agreement to ensure enforceability.
Continued monitoring
We are monitoring legislative developments and will update you when further information becomes available.
More information
If you require advice or assistance on how this may impact you, please contact Morgan Scholz, Head of Property, on (03) 8600 8890, Mark Yaskewych, Principal Lawyer, on (03) 8600 8830 or Geoff Kliger, Special Counsel, on (03) 8600 8878.
Author
This Property update was authored by Kylie Marotta, Lawyer.
Note: This update is a guide only and is not intended to constitute legal advice.