Commercial landlords ‘screaming’ for relief on land tax, rates

Joanna Brewer’s Melbourne cafe has been affected by shutdown measures. Picture: Andrew Henshaw
Joanna Brewer’s Melbourne cafe has been affected by shutdown measures. Picture: Andrew Henshaw

Commercial tenancy disputes about rent relief could soon be guided by a “mandatory code” announced by the National Cabinet.

Prime Minister Scott Morrison called on small and medium business owners to negotiate with landlords, but said mediations would also be available if required.

The Friday announcement of more specific guidelines comes after numerous retail businesses have already applied for rent relief.

W.B. Simpson and Son director Richard Simpson says he welcomes a clear code, after he had received 70 requests for commercial rent reductions from retailers, cafes, restaurants and offices across Melbourne.

“We’ve mostly been able to come to arrangements that last a short period of time, which both parties have been receptive to,” Simpson says.

“But what landlords are screaming for is some state government relief on land tax, rates and other outgoings on these properties.

“I have landlords who are self-funded retirees wondering how they are going to pay these if they have to reduce rent. Some of them don’t know how they’re going to live.”

He says more specific guidelines are required about how to end a lease if a business is unable to reopen from financial hardship during the pandemic.

Real Estate Institute of Victoria president Leah Calnan saysthe guidelines will give “agents, landlords and tenants clarity” that they have been waiting for.

Hairdressers have tried to stay open as long as possible. Picture: Jason Edwards

“I think both residential and commercial property managers have had challenging conversations between owners and tenants and we are hearing of some cases where requests for rent reductions haven’t been accepted,” Calnan says.

“We’re encouraging everyone to pay rents if they can, but if there is a situation where parties can’t come to an agreement it can be referred to the small business commissioner.” chief economist Nerida Conisbee says there had been a rise in distressed commercial listings, but banks were being accommodating with mortgage payments for businesses.

“Tenants are facing unprecedented times and we are seeing some businesses having to shut down, such as those in hospitality and tourism,” Conisbee says.

She says there could be future economic flow-on effects that impact hotels, office buildings, residential development sites and industrial properties like warehouses.

Retail veteran Solomon Lew has already told landlords Premier Investments he would not pay rent after shutting more than 800 stores amid increasingly stringent social distancing measures.

Mr Morrison said “tenants threatening to throw in the keys and walk away from leases” and landlords not taking calls from tenants was unacceptable.

“The priority has been on commercial tenancies … that’s where the National Cabinet has put its first attention,” Mr Morrison said.

“On residential tenancies, we’ve already announced a moratorium on evictions; that doesn’t mean there’s a moratorium on rents. We won’t have anyone thrown out of their homes.”

This article from The Herald Sun originally appeared as “‘Mandatory code’ flagged for commercial tenancies”.