Retail groups agree to moratorium but reject lease-breaking

But the group was lukewarm about giving tenants the opportunity to terminate leases.

“A unilateral termination right isn’t balanced, given a landlord’s inability to terminate for nonpayment of rent, and is not linked to the obligation on both the lessor and the lessee to work together during the recovery period,” they said.

The group said, while it supported tenants and landlords agreeing to rent relief and discussing lease amendments, this should only be considered on a “case-by-case basis” and tenants would need to provide financial proof of distress.

The same principle should apply to the national cabinet’s aim of a reduction or waiver of rental payments for a defined period for impacted tenants, they said.

“Our industry has a track record of working together, including on challenging issues, and this is about working together and assisting policy makers in the next phase given our group’s longstanding engagement on retail leasing issues,” ARA chief executive Russel Zimmerman said.

The retail coalition said governments should reduce statutory charges such as land tax and council rates, which landlords could pass on to give relief to tenants.

Department store Myer on Sunday joined a flood of retailers closing their doors as social distancing and mass confinement cause economic pain across the country.

The states and territories will work out what legislation is required to put the national cabinet’s principles into effect.

The national cabinet’s common set of principles, endorsed by the treasurers, include:

A short-term, temporary moratorium on eviction for non-payment of rent to be applied across commercial tenancies affected by severe rental distress due to coronavirus;

Tenants and landlords are encouraged to agree on rent relief or temporary amendments to the lease;

The ability for tenants to terminate leases and/or seek mediation or conciliation on the grounds of financial distress;

Commercial property owners should ensure that any benefits received in respect of their properties should also benefit their tenants in proportion to the economic impact caused by coronavirus;

Landlords and tenants not significantly affected by coronavirus are expected to honour their lease and rental agreements;

Cost-sharing or deferral of losses between landlords and tenants, with commonwealth, state and territory governments, local government and financial institutions to consider mechanisms to provide assistance.