We have all been enjoying the views of our makeshift home offices for almost three weeks now. Shoes have been optional, decorating the “virtual background” in homes for the Teams meetings has been one of the biggest decisions, and we have all begun to miss our local Barista’s interpretation of Long Macchiato with a dash of milk and only three quarters full. As much as we try, the home coffee machine just doesn’t cut the mustard.

However, organisations are struggling with the impact of reduced turnover and wondering what impacts lie ahead if and when they emerge from a COVID-19 state of hiatus. The Federal Government’s mandated National Cabinet Mandatory Code of Conduct for Landlord and Tenants provides clear guidance as to the process of negotiating with your landlord, and defines the actions each party should take.

A simple review of the Code’s principles is provided below to enable organisations to quickly assess their ability to access the principles of the Code and how to manage this conversation with your landlord.

Eligibility for qualification is based upon the following tests:

  • Turnover less than $50,000,000
  • Eligibility for the JobSeeker program by evidencing a reduction in turnover of 30% or greater.

For organisations that have closed as a result of government directive (hence reducing turnover to zero) the Landlord is required to waive 50% of the rent payable during this period and defer 50% until the resumption of normal business activities. Should some turnover be possible (such as restaurants providing takeaway meals) then the proportionality test is applied, such that the reduction in rent would reflect the reduction in turnover.

It is required in all situations for the tenant to be forthcoming with the turnover, or turnover projections, in a clear and honest manner to ensure the level of proportionality is ascertainable by the Landlord, and a correct reduction is provided during the COVID-19 period of closure.

This process, whilst simplistic, will require landlords and tenants to work together to mitigate the impact of COVID-19 to their business, with the view to returning to normal activities when restrictions as a result of COVID-19 are lifted.

Factorre recognises the challenges during this period, and as a result is available to assist organisations prepare for discussions with Landlords on a fixed and deferred fee basis based upon the level of turnover of the organisation.

  • For businesses with less than $1,000,000 annual turnover – $500.00 plus GST
  • For businesses between $1,000,000 and $25,000,000 – $1,500.00 plus GST
  • For businesses between $25,000,000 and $50,000,000 – $3,500.00 plus GST

Fees will be payable at the earlier of one month following return to normal commercial operations, or two months following lifting of government restrictions impacting the operation of the business.

We are here with you, every step of the way.