Commercial Tenancies Code of Conduct

On 07 April 2020, a mandatory commercial tenancies code was announced to be legislated and regulated in each State and Territory to guide landlord and tenant negotiations during the Covid-19 crisis.

SCA (NSW) believes this is relevant information given that many of our members run/operate a commercial tenancy.

The announcement comes as the Australian Bureau of Statistics reveals more than a third of Australian businesses have renegotiated their lease and rental agreements while a quarter have deferred loan repayments.

The code will bring together principles of good faith leasing and proportionality and will be overseen through a binding mediation process. It’s intended to provide a proportionate and measured burden share between the two parties while still allowing tenants and landlords to agree to tailored, bespoke and appropriate temporary arrangements that take account of their particular circumstances.

To be eligible to negotiate under the code either party must:

  • be a business that is in a position of financial distress
  • have a turnover of $50 million or less
  • be eligible to receive support under the JobKeeper program (meaning the business has experienced at least a 30 per cent drop in revenue due to Covid-19 restrictions)
  • Under the Code landlords must not terminate the lease or draw on a tenant’s security. Likewise, tenants must honour the lease agreement.

With regards to rent reduction, landlords will be required to reduce rent in proportion to the trading reduction suffered by the tenant. This will be achieved by a combination of waivers and deferrals of rent; to ensure that the burden is shared between landlords and tenants.

Waivers of rent must account for 50 per cent at least of the reduction in the rental provided to the tenant during that period while deferrals must be covered over the balance of the lease term and for no less of a period than 12 months.

For example, if the lease term goes for three years the cost can be amortised over the three-year period. However, if the lease only has another six months left to run then the tenant would still have a minimum of 12 months after the pandemic period to cover the deferrals of the rental payments.

National Cabinet again noted that it expects Australian and foreign banks, along with other financial institutions operating in Australia, to support landlords and tenants with appropriate flexibility as they work to implement the mandatory Code.

The Commonwealth Government is also acting as a model landlord by waiving rents for all its small and medium enterprises and not-for-profit tenants within its owned and leased property across Australia.

The Government is acting decisively in the national interest to support households and businesses and address the significant economic consequences of the Coronavirus.

To read more about the relief for commercial tenants click here.

 

FPAS Scheme – Extension of Commencement Date

 

Due to the COVID-19 pandemic the NSW Government has announced the extension of the commencement date for the FPAS scheme (Accreditation of Competent Fire Safety Practitioners) to 1 July, 2020.

The extension gives industry practitioners extra time to gain FPAS accreditation that identifies them as ‘competent fire safety practitioner’ (CFSPs), before such time accreditation becomes mandatory for certain types of fire protection work in NSW.

The registers of accredited practitioners (Fire Systems Design and Fire Safety Assessment) are available online.

COVID-19 JobKeeper Payment

As many of us own, operate or work within a small/medium business setting, the new JobKeeper payment announcement has brought some confidence back into a stalling economy. The Federal Government has announced a new $130bn support package with a new JobKeeper payment – a wage subsidy to keep Australians in work.

How much is the payment worth?

The Federal Government will pay eligible employers $1,500 per fortnight for each eligible worker, about 70% of the national median wage.

JobKeeper is about $400 a fortnight more than the $1,100 JobSeeker payment with the coronavirus supplement for those out of work.

Who is eligible for JobKeeper?

In order to receive a payment, both the employer and employee must meet eligibility criteria.

Eligible employers are businesses (including companies, partnerships, trusts and sole traders), not-for-profits and charities:

  • With a turnover of less than $1bn that have lost 30% or more of their revenue compared to a comparable period a year ago
  • With a turnover of $1bn or more and with at least a 50% reduction in revenue compared to a comparable period a year ago
  • Not eligible to the banking levy

Eligible employees:

  • Were employed by an eligible employer at 1 March 2020
  • Can be sole traders, full-time, part-time, or long-term casuals employed on a regular basis for longer than 12 months as at 1 March 2020.
  • Are at least 16 years of age
  • Are an Australian citizen, the holder of a permanent visa, a protected special category visa, a non-protected special category visa who has been residing continually in Australia for 10 years or more, or a New Zealander on a special category (subclass 444) visa

The government estimates that six million workers will receive this payment. Gig economy workers will be covered, as they are sole traders.

What if I am on a temporary visa?

Scott Morrison explained that New Zealanders on 444 visas will get the payment because “they are part of an ongoing economy in Australia”.

Eligibility may be expanded to others, but at the moment many temporary visa holders will be ineligible.

How will it be paid?

Eligible employers will be paid $1,500 per fortnight per eligible employee from 30 March 2020, for a maximum of six months.

Eligible employees will receive from their employers a minimum of $1,500 per fortnight, before tax. Employers can top up the payment.

Employers will pay employees as usual and payments will be made to the employer monthly in arrears by the Australian Tax Office.

Will I receive $1,500 even if I ordinarily earn less?

If an employee ordinarily receives less than $1,500 in income per fortnight before tax, their employer must pay them, at a minimum, $1,500 per fortnight, before tax. It is therefore possible for a long-term casual or part-time worker to receive more than their ordinary pay.

What if I was stood down or sacked?

If an employee has been stood down, their employer must pay their employee, at a minimum, $1,500 per fortnight, before tax.

This means that employees of businesses that shut down due to various restrictions – such as cafes, restaurants, theatres, casino workers and the like – will continue to be paid even if they are not working.

If an employee was employed on 1 March 2020, subsequently ceased employment with their employer, and then has been re-engaged by the same eligible employer, the employee will also receive, at a minimum, $1,500 per fortnight, before tax.

When will it start being paid?

The subsidy will start on 30 March, with the first payments to be received by employers in the first week of May. In the meantime, employers must continue paying their employees and then claim the money from the first week of May.

Businesses are able to register their interest in participating in the payment on the ATO website.

What about superannuation?

Employers must continue to pay the superannuation guarantee on regular wages, but it is up to employer whether they pay superannuation on additional JobKeeper payments.

Can I get the JobKeeper and other payments?

A person receiving the JobKeeper payment cannot also receive the JobSeeker payment (formerly Newstart). People who have already applied for JobSeeker can withdraw and shift to JobKeeper payments if they are re-engaged by their employer.

A person cannot be in receipt of JobKeeper payments from two or more employers.

We’ll keep our eyes out for more information as it’s published.

For now, the ATO is a good source of information for those affected by Covid-19.

Fact sheets

Fact sheet for employers for Employers

Fact sheet for employers for Employees

Fact sheet supporting businesses

Coronavirus Measures Update – Strict New State Requirements

 

Earlier this week, Prime Minister Scott Morrison announced a new stage of coronavirus restrictions, with the Government advising against indoor or outdoor gatherings of more than two people. He said it would be up to the states and territories to decide whether this measure was legally enforceable, but the NSW Premier quickly confirmed NSW would be policing the changes.

As of 12am Tuesday 31st March, NSW residents now legally must stay in their homes unless they have a “reasonable excuse” for leaving.

“Reasonable excuses” are broadly categorised as:

  • Obtaining food or other goods and services
  • Travelling for the purposes of work or education if the person cannot do it at home
  • Exercise
  • Medical or caring reasons.

The full list of reasonable excuses can be found here.

Children who live across two households can continue to switch between houses.

NSW has also adopted the two-person gathering limit.

Beyond those essential reasons for leaving the home, the Government has provided a list which would “excuse” somebody being outside.

It includes:

  • Fleeing an unsafe home, to avoid injury or illness
  • Dealing with an emergency or on compassionate grounds
  • Providing care or helping a vulnerable relative/person
  • Taking your child to childcare
  • Attending a wedding (adhering to the five-person limit) or a funeral (adhering to a 10-person limit)
  • Moving to a new house or moving between two places of residence
  • Donating blood
  • Fulfilling legal obligations
  • Accessing support services such as employment services, mental services etc
  • Fulfilling parental sharing arrangements of children
  • Going to a place of worship or to provide pastoral care, if you are a priest, minister or member of a religious order.

The NSW Police have increased their presence on the roads and are currently doing spot checks on drivers.

If travelling for the purpose of work, we advise to:

The SCA (NSW) Board is urging members to heed government advice and to be patient with the increased level of lockdowns to help protect members and consumers in strata titled complexes during the escalating COVID-19 outbreak.

It’s important to note that while these measures may be enforced for weeks, the measures are temporary.

NCAT – Temporary Changes to hearing an filing arrangements

 

To minimise the need for parties to physically attend NCAT premises, the NCAT has updated NCAT’s hearing and filing arrangements in response to the evolving Coronavirus (COVID-19) pandemic. These changes are effective immediately.

Filing of documents

If parties are unable to lodge their application or documentation online, by post or at Service NSW, NCAT is temporarily allowing parties to lodge documents by email. A new Procedural Direction, Procedural Direction 6 – Filing of Documents, has been issued by NCAT in relation to this change.

For more information on what’s required by parties when lodging documents by email, refer to NCAT’s guideline on Temporary arrangements to lodging documentation.

Any further changes to NCAT services will be announced on the Coronavirus (COVID-19) web page. Please visit this page regularly.

COVID-19 Webinar – 30 March 2020

COVID-19 Webinar – 30 March 2020

Chris Duggan: SCA (NSW)President – Webinar Facilitator

David Bannerman: Principal Bannerman Lawyers – Legal Advice and Legislation Expert

 

The webinar focuses on Strata Owner questions and answers, which includes what happens when someone in an apartment complex contracts the virus, what the government’s response is, and what owners need to do if COVID–19 infects a member of an apartment building.

Owners corporations need to prepare for whether shutdowns occur to whole floors, the whole building or even part of the building.

Some strata policies cover relocation in the event of a closure – so strata committees need to review these policies in order to plan whether a scheme is covered under a reported incident.

The webinar addresses the legality of who to inform if an infection is found in your complex or workplace – the legislation differs for workplaces, commercial and residential buildings.

Travel is also addressed, including what happens now with plane travel and the quarantine process.

The webinar reviews what guidelines, specific rules and conditions can be set around access to the building, including restrictions, facility closures, testing and liability.

By-Laws are addressed in a temporary capacity, relying on Government advice and adhering to the stages of lockdowns.

The webinar also addresses licensing requirements and claims.

Financial stress, AGMs, cashflow management, economics, unpaid contributions and interest is addressed, questioning what innovative solutions can be considered to ensure a strata scheme is functioning as effectively as possible. The Government’s response is also addressed.

A full transcript and webinar can be accessed here

COVID-19 Webinar – 27 March 2020

COVID-19 Webinar – 27 March 2020

Chris Duggan: SCA (NSW)President – Webinar Facilitator

Frank Boross: MD & Group CEO Havencab Property Group – Facilities Management Expert

David Bannerman: Principal Bannerman Lawyers – Legal Advice and Legislation Expert

 

The third webinar focuses on how facilities are being managed due to unprecedented frequent use caused by more people being at home. It also focuses on the legality of managing a scheme in these unprecedented times.

Facility management is addressed, particularly focusing on increased waste management, recycling, cleaning and responding to concerned residents. Waste systems need to be managed effectively and the webinar discusses how local councils are tackling the issue of increased waste, including increased contractor numbers.

Lockdowns are addressed, and what owners should do to prepare for a full lockdown. The webinar suggests owners and members prepare themselves for the eventuality of lockdowns, including the shift to cloud based management systems.

Compliance and legislative intent are addressed, particularly from a Government perspective.

Self-Isolation periods are addressed, with what essential services are needed moving forward.

Commercial and residential building occupation is addressed, including whether a complex should be evacuated when a building becomes infected.

The webinar walks viewers through the hospital grade cleaning and sanitisation/disinfection process which is being employed to disinfect facilities.

The webinar also addresses bylaws, cashflow smoothing and acceptable expenditure on increased cleaning.

A full transcript and webinar can be accessed here

COVID-19 Webinar – 24 March 2020

COVID-19 Webinar – 24 March 2020

Chris Duggan: SCA (NSW)President -Webinar Facilitator

Bill Coles: Managing Director, Cleaning & Caretaking Corporation Pty Ltd – Commercial Cleaning Expert

Anne Mare Paul: CCO CHU Underwriting Agency – Insurance Expert

Joel Russel: Client Director Kelly+Partners Chartered Accountants   Tax and Business Expert

 

The webinar focused on the most heightened requirement for cleaning in our generation, outlining that companies and teams have increased disinfecting and sanitising procedures at key points across the nation, including in Strata Titled buildings.

The increased requirements have allowed a healthy demand for the strata cleaning industry, which has helped keep some companies afloat and even in a position to hire more staff.

The webinar unpacked the legality and challenges, obligations and duty of care for buildings and cleaners at risk.

The webinar looked at insurances, in particular those who are financially vulnerable. There are big questions surrounding the impact to premiums, rates and affordability.

Insurers are mindful and looking at ways to mitigate increases moving forward – specifically for scheme insurance premiums.

It’s inevitable that buildings may not be able to pay premiums – insurers are working to provide necessary relief during the crisis.

The Federal and State’s government stimulus packages were outlined in detail, and the experts discussed who (relevant to the strata industry) can access the package, and how the package relates to their situation.

Full webinar can be accessed here

COVID-19 Webinar – 17 March 2020

COVID-19 Webinar – 17 March 2020

Chris Duggan: SCA (NSW)President -Webinar Facilitator

Colin Grace: Director, Grace Lawyers – Strata Law Expert

Nicole Dunn: Director, Nicole Dunn Lawyers – Legal Advice and Workplace Responsibilities

Stephen Brell: Director, Netstrata – Membership Expertise

The first webinar introduced the necessity to start moving business electronically, including voting, meetings, urgent meetings and committee related activity.

The requirements for upskilling staff and introducing online platforms to allow members to safely work and communicate from home was explored, as well as advice on social isolation, and general hygiene.

The webinar was looking at laws and regulations for AGMs and called for legislators to be lenient during these times of isolation and forced office closures.

Employer obligations were discussed in detail and the webinar reassured viewers that it’s not business as normal, but business as best we can.

A full transcript and webinar can be accessed here

 

Residential tenancies new laws – Break Lease Fees

Residential tenancies new laws – Break Lease Fees

As of March 23, new residential tenancies laws commenced aimed at improving tenants’ renting experience while ensuring that landlords can effectively manage their properties.

Changes to the Residential Tenancies Act 2010 and the new Residential Tenancies Regulation 2019 will reduce disputes over repairs and maintenance, increase protection and certainty for tenants, clarify the rights and obligations of tenants and landlords and improve transparency between these two parties.

Key changes include:

  • NSW landlords must ensure that their rental property meets 7 minimum standards to be ‘fit for habitation’
  • New and improved disclosure obligations on landlords and their agents, including disclosure of material facts, and strengthening the remedies for tenants when these obligations aren’t met
  • Landlords must ensure that smoke alarms are in working order. A penalty will apply for landlords who don’t comply
  • Making it easier for tenants to install fixtures or make alterations, additions or renovations that are minor
  • Mandatory set fees when a tenant breaks their lease will apply to all new fixed-term agreements that are 3 years or less
  • Limiting rent increases to once every 12 months for periodic (continuing) leases
  • New powers for NSW Fair Trading to resolve disputes between tenants and landlords. This includes powers to investigate and issue rectification orders to require landlords to carry out repairs and maintenance, or tenants to fix damage.

SCA (NSW), are authoring a complete blog series to discuss each of the changes in detail, including what they were vs what they are now.

Break Lease Fees: 

When a tenant signs a fixed-term agreement, they are committing to stay for the full term.

If a tenant wants to move out before the end of the fixed term, there could be costs involved.

A tenant should give the landlord as much notice as they can if they need to end the agreement early.

A tenant should also make it as easy as possible for the landlord or agent to show the property to potential new tenants.

Breaking a fixed-term agreement signed from 23 March 2020:

For agreements of 3 years or less:

Mandatory break fees may apply which is payable based on the stage of the agreement.

A break fee is a penalty a tenant agrees to pay if they move out before the end of the fixed term.

If the mandatory break fee applies, the set fee payable is:

  • 4 weeks’ rent if less than 25% of the agreement has expired
  • 3 weeks’ rent if 25% or more but less than 50% of the agreement has expired
  • 2 weeks’ rent if 50% or more but less than 75% of the agreement has expired
  • 1 weeks’ rent if 75% or more of the agreement has expired.

For agreements more than 3 years: 

A landlord may still seek compensation by applying to the NSW Civil and Administrative Tribunal (the Tribunal).

These costs may include loss of rent, advertising and a letting fee if the landlord uses an agent.

The landlord or agent may negotiate an agreed amount of compensation with the tenant.

If the tenant and landlord are unable to agree on the amount of compensation, the landlord may claim from the bond or apply to the Tribunal for an order that the tenant pays the landlord a certain amount of compensation.

The landlord will need to show the Tribunal what (reasonable) steps they took to minimise their losses (e.g. advertising for a new tenant without delay).

Breaking a fixed-term agreement signed before 23 March 2020:

The former rules apply, and parties should check their agreement under ‘Additional terms’ to see if the agreement includes the optional break fee clause.

Optional break fee included in the agreement: 

The optional break fee clause will apply if the break fee clause has not been deleted from the tenancy agreement. The break fee payable will be either:

  • 6 weeks rent if the tenant leaves in the first half of the fixed-term agreement, or
  • 4 weeks rent if the tenant leaves in the second half of the fixed-term agreement.

The same optional break fee clause applies for fixed-term agreements of more than 3 years unless the tenancy agreement specifies a break fee of another amount.

Optional break fee not included in the agreement: 

The optional break fee clause will not apply if the break fee clause has been deleted from the tenancy agreement.

A landlord may still seek compensation by applying to the Tribunal.

These costs may include loss of rent, advertising and a letting fee if the landlord uses an agent.

The landlord or agent may negotiate an agreed amount of compensation with the tenant.

If the tenant and landlord are unable to agree on the amount of compensation, the landlord may claim from the bond or apply to the Tribunal for an order that the tenant pays the landlord a certain amount of compensation.

The landlord will need to show the Tribunal what (reasonable) steps they took to minimise their losses (e.g. advertising for a new tenant without delay).

Breaking a fixed-term agreement without penalty:

In some circumstances, a tenant can break a fixed-term agreement early without penalty.

A tenant can give 14 days’ written notice to end an agreement early without penalty if:

  • They have accepted an offer of social housing (e.g. from DCJ Housing)
  • They need to move into an aged care facility or nursing home (not a retirement village)
  • A landlord has put the property on the market for sale during the fixed-term, and the tenant was not told before signing the agreement that the property would be sold
  • If the property becomes listed on the Loose-fill asbestos Insulation register during the tenancy or was previously listed without the landlord or agent disclosing that information to the tenant.
  • A tenant still needs to pay the rent until they hand back possession of the property.

Ending a tenancy because of domestic violence:

A tenant can end their fixed-term or periodic tenancy immediately, without penalty, if the tenant or their dependent child is in circumstances of domestic violence.

A tenant or their dependent child is in circumstances of domestic violence if they:

  • Were the victim of a domestic violence offence during the tenancy
  • Are protected by an in-force provisional, interim or final Domestic Violence Order (DVO)
  • Are protected against family violence by an in-force family law injunction
  • Have been declared by a medical practitioner to be a victim of domestic violence perpetrated by the relevant domestic violence offender during the current tenancy.

To end a tenancy in circumstances of domestic violence, a tenant will need to give:

The landlord or the landlord’s agent a domestic violence termination notice and attach one of the following permitted forms of evidence:

 

  • Certificate of conviction for the domestic violence offence
  • Family law injunction
  • Provisional, interim or final Domestic Violence Order
  • Declaration made by a medical practitioner in the prescribed form.
  • Each co-tenant a domestic violence termination notice.

A minimum notice period is not required. The termination notice must include a termination date, which can be on the same day that the notice is given or a date after the notice is given.

A domestic violence termination notice does not need to be given in person.

Our next topic will cover changes to smoke alarms.

Stay tuned.

SCA (NSW), are here to help our members transition to the new laws.

If you would like to read about all the changes for tenants and landlords alike, please visit the Department of Fair Trading’s website here.