New WA code provides certainty for commercial tenants
- Framework for rent relief negotiations between commercial tenants and landlords
- Code applies to small businesses with turnover of less than $50 million a year
- Landlords required to respond to written requests from tenants in 14 days
The McGowan Government has introduced a new code of conduct to help commercial tenants and landlords reach agreements about rent during the COVID-19 coronavirus pandemic.
The code applies to small businesses, including retail stores, with an annual turnover of less than $50 million and which qualify for the JobKeeper scheme or have experienced a decline in turnover of 30 per cent or more during the emergency period (six months from 30 March 2020). Small charities only need to show a 15 per cent reduction in turnover.
The code provides guidelines to assist commercial tenants and landlords to negotiate a rent relief agreement during COVID-19 to ensure businesses survive the economic downturn associated with the pandemic. It implements the key principles of a national code released by National Cabinet last month.
The code outlines a process for tenants to request rent relief and landlords are required to:
- offer relief at least proportionate to the reduction in turnover that the business has suffered; and
- provide at least half of that rent relief as a waiver, with the rest to be either deferred or waived.
The code was developed by Consumer Protection as part of the regulations of the Commercial Tenancies (COVID-19 Response) Act 2020. The code will operate in conjunction with the Act, which provides protections such as a moratorium on evictions for small commercial tenants and prevents a landlord from increasing rent or charging interest on arrears during the emergency period. For more information about the legislation, visit www.dmirs.wa.gov.au/covidcomten.
For practical advice on the best way to reach an agreement on rent relief under the new code, small commercial tenants and their landlords are encouraged to visit the Small Business Development Corporation's website www.smallbusiness.wa.gov.au.
Comments attributed to Commerce Minister John Quigley:
“The McGowan Government’s code complements a moratorium on commercial tenancy evictions for non-payment of rent and the setting aside of $100 million in the COVID-19 stimulus package for land tax relief grants to be paid to certain commercial landlords in exchange for rent relief given to small businesses.
“As the Minister who oversees Consumer Protection I would like to thank all of the stakeholders who participated in the consultation during the code’s development. These included many individuals who wrote to me and other members of the Government and business sector representative organisations.”
Comments attributed to Small Business Minister Paul Papalia:
“We know many WA businesses are doing it tough. This commercial tenancies code will assist them to negotiate rent relief with their landlords and come out the other side of the COVID pandemic with their business intact.
“Commercial landlords and tenants are urged to enter into negotiations with a collaborative attitude to reach mutually agreeable outcomes to contribute to the survival of small businesses in Western Australia during the emergency period.”
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