Monday, 18 May 2020
The South Australian Business Chamber has welcomed the passing of the Commercial Leasing Code through Parliament saying it will provide much needed clarity for both small businesses and landlords.
The peak industry body will hold a free webinar on Tuesday 19 May to break down the Code, after a recent survey found 71 per cent of commercial tenants had been heavily impacted by COVID-19 with a reduction in revenue of 30 per cent or more.
The South Australian Business Chamber Director of Policy and Advocacy, Andrew McKenna, said commercial tenancy obligations were proving to be an ongoing headache for business owners.
“Waiting for the Commercial Leasing Code to become law was raised as the greatest hesitation for businesses to start negotiations with the landlords in the recent March quarter the South Australian Business Chamber — William Buck Survey of Business Expectations,” Mr McKenna said.
“Of the 44 per cent of businesses that did actually enter negotiations before the Code became law, there were mixed results with 56 per cent successful in obtaining rent relief proportionate to their reduction in turnover, 20 per cent obtaining semi-proportionate relief and 24 per cent with no relief at all.
“Not surprisingly, small businesses with turnover under $500k were twice as likely to be unsuccessful in rent reduction negotiations than businesses in the $2m-$5m turnover range which is why the Code needed to become law.
“Now the Code is law, it establishes good faith principles for re-negotiation of commercial leases and hopefully produces a better success rate for small businesses.”
The South Australian Business Chamber says the Code encourages parties to negotiate suitable alternative arrangements with a backstop of mediation through the Small Business Commissioner or ultimate enforcement through the Magistrates Court.
“We welcome the passing of the Code through Parliament as it will help encourage landlords and tenants to work together to ensure business continuity,” said Mr McKenna.
“We know landlords also have financial commitments they need to meet during this pandemic too and hopefully what the Code will do is help provide clarity for all parties on their roles and responsibilities when it comes to commercial leases and rent reductions.”
The South Australian Business Chamber’s Understanding how the new SA Leasing Code supports COVID-19 impacted businesses Webinar will be held on Tuesday 19 May 5:30pm‑6:30pm.
The webinar will detail how businesses can use the Code to re-negotiate their commercial lease, how the Code will work under SA law, practical tips on how to approach a request for rent relief and what the options are if negotiations are unsuccessful.
