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Warning to businesses who rent: At the mercy of the landlord

The Beagle Editor, AT THE MERCY OF THE LANDLORD?

Early on during the COVID19 pandemic the Federal, State and Territory governments have enacted legislation to protect employers and employees through the jobkeeper and jobseeker tools.

Equally legislation has been enacted, for a limited time, to protect people who, because of the pandemic, cannot afford to pay rent. The link below gives more detailed information on measures in place:

https://www.tenants.org.au/blog/what-you-need-know-covid-19-evictions-and-rents

For retail and other commercial leases that information, on COVID19 measures, is

contained in the link below:

https://www.legislation.nsw.gov.au/regulations/2020-175.pdf

To assure equitable application of the temporary relief measures proposed, national Cabinet has enacted a Mandatory Code of Conduct of Commercial Leasing Principles that must be observed by landlords and tenants alike.

https://www.pm.gov.au/sites/default/f iles/files/national-cabinet-mandatory-code-ofconduct-

sme-commercial-leasing-principles.pdf

A central tenet to both private and commercial leases is that, whilst these measures

are in force, there is a moratorium on evictions. Including evictions for non-payment

of rent.

In commercial leases the code prescribes an obligation for landlords to enter into

rent negotiations with tenants, where the tenant meets a turnover impact threshold

(see points 6 and 7 of the regulations 2020 above).

Sounds like all is well then and retail and small business owners need not worry? Or should they?

Picture a well-known fixture of Moruya retail in the main street. Business was already

seriously impacted by the bushfires and due to the forced absence of the usual

holiday makers. COVID 19 caused a down turn of 70% in trading for the month of

April when compared to April 2019 (itself not a shining example due to the pending

Federal elections).

Aware of all the existing measures and regulations and forced by financial pain, the

business owner sought to enter into rent negotiations with the landlord, in a bid to

seek a, temporary, reduction in rent payable. The regulations are abundantly clear

and leave the landlord with little choice but to enter into such negotiations and work

out an acceptable agreement for both parties. The landlord promised to come back

on the issues raised the very next day. That never happened. What happened instead was a letter being delivered, giving 30 day notice of termination of

the lease.

Legally, the landlord can do this. The lease is a periodic one, silently being extended

month by month. And where the landlord does not provide a reason for termination,

as is the case here, he only need to give 30 days notice.

Whether the actions of the landlord pass muster when it comes to conscionable and

reasonable conduct is unclear to me.

With no comparable premises available on the main street a business of 15 years

risks having to silently disappear into that good night. Leaving a business owner

distraught and deprived of a sole source of income. Cees (Casey) de Rover

Above: first the recession before Summer 2019, next the empty streets of summer and the bushfires, then Covid with a massive spike in on-line purchases. Ahead Moruya looks at being bypassed. Now we see greedy landlords added to the mix. It does not auger well for recovery. Will it send us back to the days of only having general shops for essentials?

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