The Executive Director of the Australian Retailers Association, Russell Zimmerman, has welcomed the establishment of a mandatory retail leasing code of conduct by the Morrison government, saying the code provided “major relief” to small and medium-sized retailers suffering due to the impact of Coronavirus.
Speaking after the code was announced by Prime Minister Scott Morrison, Mr Zimmerman said the impact of an unprecedented downturn in trade would be shared by landlords and tenants by reducing rent in proportion to the downturn in turnover suffered by the retailer to ease cash flow pressures.
“We thank the Prime Minister, the Treasurer, and their colleagues for their work on this code, which will provide certainty and relief to many small and medium retailers facing significant financial stress and hardship,” Mr Zimmerman said.
“This will help landlords and tenants to negotiate in good faith and work towards mutually beneficial agreements, which ensure the economic impact caused by the pandemic is borne between retailers and landlords,” Mr Zimmerman continued.
Mr Zimmerman said the mandatory code of conduct would be legislated by the states and territories, becoming a mandatory national code to guide retail leasing agreements.
“We want to acknowledge the state Premiers who have worked tirelessly to fight the pandemic. It is now their turn to step up and legislate the code in their own jurisdictions so we have a uniform set of national guidelines,” Mr Zimmerman said.
Retailers with a turnover below $50 million, which are eligible for the JobKeeper programme are covered by the code, which provides tenants with rent reduction proportionate to decreases in turnover, though the mechanism by which this would be substantiated will need to be addressed.
“Rental waivers must constitute at least 50% of the reduction in rent payable – possibility more where tenants may struggle to fulfil their existing obligations – while deferrals constitute the remainder of the reduction,” Mr Zimmerman said.
“We hope all landlords will apply the principles of this code in negotiations with all affected retailers – including those with a turnover above $50 million – having fair regard to the size and financial structure of those businesses,” Mr Zimmerman said.
Under the code, tenants must remain committed to the terms of their lease, while landlords would be barred from terminating the lease during the COVID-19 pandemic period, ensuring stability and certainty for both parties.
“The code ensures that retailers and landlords bear a fair share of the economic pain caused by disruptions, and ensures any benefits or relief are passed on to preserve as many businesses as possible through this crisis,” Mr Zimmerman added.
“Many retailers are suffering an enormous downturn in trade and have been unable to fulfil rental obligations; moving forward, we believe retailers and landlords will resolve their issues and come to a fair agreement,” Mr Zimmerman concluded.
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About us: founded in 1903, the Australian Retailers Association is Australia’s largest retail association, representing a $325bn sector employing more than 1.3m people. As Australia’s premier retail body, the ARA works to ensure retail success by informing, protecting, advocating, educating and saving money for its 7,500 independent and national retail members. To learn more, visit www.retail.org.au or call 1300 368 041.