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  7. The other side of the coin for landlords: SME Commercial Leasing Principles Code of Conduct Update (Part II)
11 Apr 2020

HHG Legal Group’s Property team’s Matthew Lilly explores the proposed measures to assist landlords supporting tenants during COVID-19, following the announcement of the SME Commercial Leasing Principles Code of Conduct last week.

20200411 Commercial leasing IA

We recently discussed the SME Commercial Leasing Principles Code of Conduct which the Federal Government recently announced to assist tenants with loss of revenue as a result of the COVID-19 pandemic.


We highlighted in that article the need to give special consideration to small property companies and entities like SMSFs who rely on rental income in retirement. Landlords are telling us they are concerned with how they are going to comply with their financial commitments to their banks and give this relief to their tenants.

Commercial landlords may now have some of this burden lightened as the Australian Banking Association has announced proposed measures by banks to support commercial landlords who assist tenants during this COVID-19 pandemic.

The type of businesses that these measures would appear to apply to includes commercial landlords of properties such as local shopping centres, pubs, clubs and restaurants.

Whilst these measures are subject to approval by the ACCC but they are a good starting point for financial relief for commercial landlords who assist tenants with loss of revenue as a result of the COVID-19 pandemic.

Commercial landlords should consider whether this relief will apply to them which is given on an “opt-in” basis and whether they qualify under the following conditions:

  1. an undertaking must be given to the bank that for the period of the interest capitalisation, that they will not:
    1. terminate leases; or
    2. evict current tenants for rent arrears as a result of COVID19;
  2. they have advised the bank that their business is affected by COVID-19;
  3. they are  current in terms of existing facilities 90 days prior to applying for this relief; and
  4. the relief provided means that interest is capitalised – that is, the term of the loan is extended by the deferral period payments are increased after the deferral period.

The two key measures (subject to the conditions above) are:

  1. Businesses with total business loan facilities of up to $10 million (increased from the $3 million small business threshold) to be able to defer loan repayments for six months (facilities above $10 million will be considered on a case by case basis); and
  2. Banks will not enforce business loans for non-financial breaches of the loan contract (such as changes in valuations)

HHG Legal Group can assist

For over 100 years HHG Legal Group has been proudly serving Western Australian families, business and individuals. Never before has the State seen such a crippling time for many small businesses and we are committed to supporting the communities in which we operate.

If you require advice relating your commercial leasing obligations in the time of COVID-19, or require other property law advice, we are offering unprecedented initial consultation fees (for example, the below video consultation fee is 50% off our normal rates) to assist struggling businesses through this challenging time.

You can send us an enquiry to book a virtual meeting with a property lawyer or call us on 1800 609 945.

Return to COVID-19 Resources Page

*This is general information only, and does not constitute specific legal advice. Please consult one of our experienced Legal Team for specific advice relevant to your situation.

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