SA looks after landlords with code of conduct

South Australia has adopted Australia’s most landlord-friendly code of conduct for commercial leases, with a property owner’s capacity to provide relief to be considered in any rent re-negotiations.

The legislation takes into account that the concept of proportionality under other states’ codes of conduct places a disproportionate burden on landlords to bear the cost of tenants’ businesses hibernating through the coronavirus crisis.

In other states and territories, landlords are required to provide rent relief in direct proportion to the reduction in a tenant’s revenue, a concept that has created significant concern among commercial property owners who  are also experiencing income reductions due to the pandemic.

SA’s legislation requires landlords to give regard to reductions in revenue, but they are not required to provide exact proportionate relief.

To qualify for a rent reduction, a tenant in SA must demonstrate they are suffering financial hardship due to COVID-19, while any rent repayment period will have a maximum of 24 months.

Rent repayment periods were prescribed by the National Cabinet’s recommended code of conduct to have a minimum repayment period of two years. 

Other key aspects to SA’s code include the requirement for existing deals that have been negotiated to be honoured and tenants to have an annual turnover of less than $50 million.

Disputes will be mediated by SA’s Small Business Commissioner, with final determination at the Magistrates Court if that fails.

Property Council of Australia SA executive director Daniel Gannon said the outcome was a direct result of “relentless and meaningful” advocacy.

“The code takes into account our state’s unique property ownership profile and as a result is less prescriptive than interstate models,” Mr Gannon said.

“In her speech to Parliament, Attorney-General Vickie Chapman outlined that a key aspect of the Government’s legislation was: ‘flexibility, rather than a one size fits all model’.”

“The Property Council approached the battlefield of proportionality with evidence about the disproportionate impact on a landlord’s net income and profitability, and we did so to ensure your ongoing business sustainability.”