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The National Cabinet has issued its own principles regarding commercial leases, set to be discussed on March 07. 

The National Cabinet has agreed that a mandatory code of conduct will be developed - guided by principles - and then legislated by State and Territory Governments. 

The code will apply to tenancies where the tenant is eligible for the Commonwealth Government’s JobKeeper assistance and is a small- or medium-sized enterprise (less than $50 million turnover). 

The National Cabinet's principles on which the code of conduct will be based are: 

(a) Where it can, rent should continue to be paid, and where there is financial distress as a result of COVID-19 (for example, the tenant is eligible for assistance through the JobKeeper program), tenants and landlords should negotiate a mutually agreed outcome

(b) There will be a proportionality to rent reductions based on the decline in turnover to ensure that the burden is shared between landlords and tenants

(c) There will be a prohibition on termination of leases for non-payment of rent (lockouts and eviction)

(d) There will be a freeze on rent increases (except for turnover leases)

(e) There will be a prohibition on penalties for tenants who stop trading or reduce opening hours

(f) There will be a prohibition on landlords passing land tax to tenants (if not already legislated)

(g) There will be a prohibition on landlords charging interest on unpaid rent

(h) There will be a prohibition on landlords from making a claim to a bank guarantee or security deposit for non-payment of rent

(i) Ensure that any legislative barriers or administrative hurdles to lease extensions are removed (so that a tenant and landlord could agree a rent waiver in return for a lease extension) 

For the landlords and tenants that sign up to the code, States and Territories have agreed to look at providing the equivalent of at least a three-month land tax waiver and three month land tax deferral on application for eligible landowners. 

Landlords must pass the benefits of these moves onto the tenant. 

The proposed code of conduct will be further discussed at the next National Cabinet meeting (March 07). 

The National Cabinet's code comes after the National Retail Association (NRA), Australian Retailers Association (ARA), the Pharmacy Guild of Australia (PGA) and the Shopping Centre Council of Australia (SCCA) put seven principles forward for consideration.

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