Let's hibernate and preserve: An insight into the mandatory code for commercial tenancies

Let's hibernate and preserve: An insight into the mandatory code for commercial tenancies

This afternoon, National Cabinet has provided further detail on mandatory rent relief for commercial tenancies.

Below are some key takeaways from the PM's press conference about the proposed mandatory industry code for commercial tenancies.


The mandatory code will apply to landlords and tenants where either party is eligible for the JobKeeper program (<$50 million or less turnover).

Good faith leasing principles to apply

a. Landlords will be restricted from terminating the lease and calling on securities under the lease; and

b. Tenants must continue to comply with the lease terms.

Reductions on rent to be negotiated

As a guiding principle, rent reductions should be proportionate to the reduction in the tenant's business over the pandemic period.

a. Waivers of rent – waivers should account for at least 50% of the reduction of rent payable under the lease; and

b. Deferral of rent – deferrals must be amortised over the balance of the lease term and for no less than 24 months.

Binding mediation

If landlords cannot reach agreement on rent relief with qualifying tenants, the parties will be obliged to submit to binding mediation, which will be governed by the applicable states and territories.

Further details on the mandatory code will come in due course once each State legislates the code.

For a variety of reasons it will be critical to accurately document any agreements that landlords and tenants reach – generally by way of a deed of variation of lease.

All information on this site is of a general nature only and is not intended to be relied upon as, nor to be a substitute for, specific legal professional advice. No responsibility for the loss occasioned to any person acting on or refraining from action as a result of any material published can be accepted.

Key contacts

Wilson Luong

Wilson Luong