One question that is arising from landlords and tenants, is what information a tenant should provide to a landlord in support of its claim for rent relief.
Based on the Regulations, the following information should be provided:
- A written request for rent relief by the tenant;
- A statement that the tenant has an eligible lease, meaning that the lease was in place on 29 March 2020 and the tenant is not part of a group whose turnover exceeds $50m annually;
- The tenant is a SME, effectively meaning that the tenant's turnover is less than $50m annually;
- The tenant qualifies for and participates in JobKeeper – a screenshot of ATO application for JobKeeper will suffice;
- A statement that the tenant's turnover has been adversely affected. A copy of a tenant's BAS should be provided to support the claim, with a statement of the corresponding turnover from the previous year.
We know some landlords are seeking a lot more financial information, such as balance sheets and profit and loss statements. Most tenants do not have such information at this time and, in our view, is not required to be provided.
Please note that the Regulations do not prescribe what is to be provided, except for the items in points 1-5 above. However, any offer for relief must take certain matters into account, including the reduction in the tenant's turnover and whether the failure to offer relief would affect the tenant's capacity to comply with the lease. Landlords may justify a claim for financial information based on this criteria.
Of course just because a tenant's lease does not qualify for relief, there is no reason that the parties cannot negotiate reduced rent.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. Madgwicks is a member of Meritas, one of the world's largest law firm alliances.