Australia's retail bodies have welcomed the National Cabinet's announcement of a mandatory Code of Conduct for commercial leases of small to medium businesses.
The Australian Retailers Association (ARA), National Retail Association (NRA), Pharmacy Guild of Australia (PGA), and Shopping Centre Council of Australia (SCCA) have stated that they are ready to work with the government to help the states and territories implement the guidelines.
The Code comes after the bodies submitted their own principles for commercial leases to the government for consideration.
Upon announcing the Code, the Federal Government said that it will apply to businesses with a turnover of up to $50 million and is based on previously agreed-upon principles.
"The Code builds on the draft codes submitted by landlord and tenant representative bodies in the commercial property sector.
"The purpose of the Code is to impose a set of good faith leasing principles for application to commercial tenancies (including retail, office and industrial) between owners/operators/other landlords and tenants.
"The Code will apply to circumstances where the tenant is a small-medium sized business (annual turnover of up to $50 million) and is an eligible business for the purpose of the Commonwealth Government’s JobKeeper program.
"The National Cabinet agreed that there would be a proportionality to rent reductions based on the tenant’s decline in turnover to ensure that the burden is shared between landlords and tenants.
"The Code provides a proportionate and measured burden share between the two parties while still allowing tenants and landlords to agree to tailored, bespoke and appropriate temporary arrangements that take account of their particular circumstances.
"National Cabinet again noted that it expects Australian and foreign banks along with other financial institutions operating in Australia, to support landlords and tenants with appropriate flexibility as they work to implement the mandatory Code."
NRA CEO Dominique Lamb said that the Code is balanced for both landlords and tenants.
"The model announced by the Prime Minister is sensible and proportionate.
"It will ensure – to the greatest degree possible – that businesses who suffer a major downturn have the best chance of surviving.
"And that is good for both tenants and landlords.
"Just as we want to see businesses survive to keep employing their staff, property owners will also want to see the retail sector survive," she said.
SCCA CEO Angus Nardi added that many of the principles in the Code had already been agreed upon by the bodies.
"A lot of the principles under the Code the SCCA has already agreed to, including publicly and independently committing to not terminating leases for the non-payment of rent a few weeks ago.
"We welcome the approach to proportionality, which we understand provides a set of guiding principles and examples, which will ultimately be negotiated on a case-by-case basis.
"The SCCA’s key focus is on small, medium and family businesses.
"Every day, our members are having hundreds of conversations with their retailers.
"Like many other industries, centre owners are receiving high volumes of requests for assistance. These are being worked through as quickly as possible," he said.
ARA executive director Russell Zimmermann said that the ARA is ready to work with the other bodies to help the industry emerge together on the other side of COVID-19.
"The Prime Minister and National Cabinet can be assured that the ARA and our retail industry colleagues will work to ensure the Code is progressed and applied in good faith.
"The most important issue is that the industry is talking, and landlords and tenants are working together to ensure business continuity.
"We look forward to working with the NRA, Pharmacy Guild and SCCA as we are all working towards the same goal – to emerge from the other side of this unprecedented experience with our retail partners especially our SMEs in the best possible position to succeed," he said.