Still waiting for a comprehensive response
Following the National Cabinet meeting yesterday, commercial tenants and landlords are still waiting for a comprehensive and clear response from government. There is still no resolved position on tenancy issues, causing confusion for landlords and tenants.
A detailed response is expected by mid-week
Frustration is building, but a detailed response has been promised for some time in the next few days, with the Prime Minister emphasising that the reason for the delay in announcements on these issues is the importance of working out the detail. Regrettably, a similar promise was made a week ago, but those expectations were not met.
What is clear - the banks have a critical role in the relief package
While the States and Territories appear to be holding back on making any State/Territory-based announcements, the Prime Minister indicated that government(s) will be relying on the banks to form a pivotal role in the overall issue via specific terms to be attached to mortgage relief to landlords, although we have yet to see any specific details around this. He said that the National Cabinet is still working hard on issues relating to residential and commercial tenancies, based around the following:
- A six month moratorium on evictions of people who are in financial distress due to COVID-19, which means that they are unable to meet their lease obligations. It is not clear what financial distress means in the current circumstances.
- According to the Prime Minister, the message to commercial landlords and tenants,
‘…is a very straightforward one. We need you to sit down, talk to each other and work this out about looking at the businesses which have been closed, businesses that may have had a significant reduction in their revenues and we need landlords and tenants to sit down and come up with arrangements that enable them to get through this crisis so on the other side, the landlord has a tenant, which is a business that can pay rent and the business is a business that can re-emerge on the other side of this and be able to go on and employ people on the other side of these arrangements. And we want the banks to help them achieve this outcome.’
- The Federal and State Governments intend to support landlords and tenants in having open and mutually agreeable discussions, but if there is not co-operative activity between banks, landlords and tenants, then they will not receive the support of government that they might otherwise expect.
- The ‘hibernation’ approach means banks, landlords and tenants working together to come to bespoke, customised arrangements which suit the relevant individual circumstances. The goal is to have, on the other side of COVID-19:
- Businesses (tenants) that can re-open, without being weighed down by excessive debt due to rental arrears;
- Landlords that have tenants, so they can continue to have the ability to support their investments; and
- Banks that have clients, in both the landlords and the (tenant) businesses.
What the Banks have said, supportive but…
This morning, the CEO of the Australian Banking Association, Anna Bligh, seemed to support the above principles, saying that where landlords do the right thing by their tenants, their bank will do the right thing by them, and that the banks have committed to provide $250 billion worth of bank loans to eligible (landlord) businesses, under which 98% of Australian businesses will be eligible for a six month deferral of repayments.
The devil is in the detail
This issue is dragging. Resolution of the relief package needs clarification in order to unite key stakeholders and avoid confusion and disharmony.
Again, however, we have no clear outcome and must continue to ‘watch this space.’