If a business qualifies for JobKeeper, then it is the Government’s expectation that the Code will govern what should happen when negotiating rent reductions during the period that the JobKeeper programme is operational.
Essentially, depending upon the % downturn in a tenant’s business, the expectation is that a landlord will reduce the rent by the same % in downturn over the period that the pandemic continues. At least 50% of the downturn amount must be by way of rent waiver (i.e., rent is not payable at all) and 50% by way of rent deferral (i.e., the deferred rent is payable over the balance of the lease term or 24 months, whichever is longer). So, if a business has experienced a 50% downturn in revenue and monthly rent is $5,000, the landlord would be expected to reduce the rent by 50% ($2,500) and of that amount, $1,250 per month would be waived and $1,250 would be deferred.
It is important that landlords and tenants know what the Code says and negotiate in good faith to achieve workable solutions. The State Government will no doubt bring in complimentary legislation so it important to keep up to date with changes.
