Navigating Leases and the COVID-19 Outbreak – Part 2

Since our first COVID-19 leasing update, Prime Minister Scott Morrison has flagged a six (6) month moratorium on the termination of commercial and residential leases for the non-payment of rent.

Mr Morrison said last night that:

“States and territories will be moving to put a moratorium on evictions of persons as a result of financial distress if they are unable to meet their commitments”.

The length of this ban on evictions was slated to be six (6) months.

Mr Morrison says that he wants landlords and tenants “to work with each other and banks while the policy is worked on.”

It is unclear at this stage when the moratorium will start, or how a tenant’s “financial distress” or “ability to meet their commitments” will be defined or assessed.

We will continue to closely monitor both the State and Federal Government proposals to implement the six (6) month ban on evictions.

The Victorian Government has announced tax relief to support businesses through Victoria’s State of Emergency, as part of a broader economic survival package in response to the COVID-19 outbreak. This includes the following:

  • Waiving payroll tax for the 2019-2020 financial year for some eligible businesses with annual Victorian taxable wages up to $3 million and deferring the paying of payroll tax for the first quarter of the 2020-2021 financial year.  Eligible businesses must continue to lodge returns.
  • Waiving Renewable Liquor Licence fees for 2020.
  • An option to defer the payment of land tax for 2020 until after 31 December 2020 for owners that have at least one (1) non-residential property and total taxable landholdings below $1 million.

The Government has also announced an economic response to COVID-19, including initiatives to assist businesses and to support the flow of credit.

Our recommendations in relation to leasing issues remain unchanged.  If you are being financially impacted by the COVID-19 crisis, whether you are a tenant or a landlord, negotiations may need to be commenced with the other party or parties to your lease.

Negotiations may include seeking temporary rent relief or suspension of rent if you are a tenant and seeking your bank’s deferral of repayment obligations if you are a landlord.  Whether you are a tenant or a landlord, you may be entitled to utilise assistance provided by the Federal and State Governments.