Recent laws have changed to support both landlords and tenants in light of the impact of COVID-19.
Here are four points to consider:
- The new laws will prohibit landlords, for a period of 6 months from 25 March 2020, from terminating leases or taking possession under leases for failure by tenants to pay rent in the circumstances where tenants are forced to cease trading.
- Whilst tenants may be released from paying rent in these circumstances, tenants are not necessarily released from their obligations to pay outgoings.
- Where tenants are still trading but have suffered a loss of profit, our Government encourages landlords and tenants to work together to come up with a solution that will enable tenants to continue trading from the premises at a reduced rate of rent.
- If premises owned by landlords are secured by mortgages, landlords may seek relief from their bank or financial institution. The Australian Banking Association on 30 March 2020 announced the loan deferral scheme for COVID-19 affected borrowers with business loan facilities totalling a maximum of $10 million. The scheme may also be extended to those affected businesses with facilities exceeding $10 million on a case by case basis. The scheme enables eligible landlords to seek relief from their financial institution for a period of up to 6 months commencing from 30 March 2020. Such relief may include:
- a deferral of scheduled loan repayments
- a waiver of fees and charges
- interest free periods or interest rate increases
- debt consolidation to assist with making repayments more manageable.
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.