--- title: National Cabinet Code of Conduct - SME Commercial Leasing Principles description: We highlight the announced National Cabinet - Code of Conduct for SME commercial leases & new principles for commercial tenants & landlords. image: https://blog.agredshaw.com.au/hubfs/National%20Cabinet%20-%20LinkedIn.png --- - [** info@agredshaw.com.au](mailto:info@agredshaw.com.au) - [** 07 3002 2699](tel:0730022699) - [** Pay Account](http://dev3.ignitionmedia.com.au/pay-account/) x [Archer Gowland Redshaw](https://agredshaw.com.au/) Blog       [Home](https://blog.agredshaw.com.au/) / Blog # National Cabinet Code of Conduct - SME Commercial Leasing Principles Over the last 24 hours, the Federal Government has announced the introduction of its mandatory Code of Conduct for Commercial Landlords & Tenants. The formation of the Code stands to enact a set of good faith leasing principles relating to tenancy agreements between landlords & tenants of SME businesses (up to $50 million turnover) – with aims at ‘sharing the burden’ of financial & cash-flow impacts resulting from COVID-19. Additionally, the Code will seek to appropriately balance the interests of both tenants & landlords, and will apply where either are eligible for the Federal Government’s JobKeeper program. Access to the full Code of Conduct can be found ([www.pm.gov.au](https://www.pm.gov.au/sites/default/files/files/national-cabinet-mandatory-code-ofconduct-sme-commercial-leasing-principles.pdf)), however please see below a number of key principles outlined: - Landlords must not terminate leases due to non-payment of rent during the COVID-19 pandemic period (or reasonable subsequent recover period). - Tenants must remain committed to the terms of their lease. - Any failure to abide by the substantive terms of their lease will forfeit any protections provided under the Code. - Landlords must offer tenants proportionate reductions in rent payable in the form of waivers and deferrals of up to 100% of the amount ordinarily payable, based on the reduction in the tenant’s trade during the COVID-19 period. - E.g. A 40% reduction in a tenants turnover would warrant a 40% reduction in rent. - Rental waivers must constitute no less than 50% of the total reduction in rent payable over the pandemic period. - Payment of rental deferrals by the tenant must be amortized over the balance of the lease term and for a period of no less than 24 months – whichever is the greater. - Any reduction in statutory charges (e.g. land tax, council rates) or insurance will be passed on to the tenant in the appropriate proportion applicable under the terms of the lease. - Landlords must not draw on a tenant’s security for the non-payment of rent during the COVID-19 period, or a reasonable subsequent recovery period. - If landlords do not enter into negotiations with their tenant, their rights under the lease will be forfeited. Furthermore, as advised during the previous ‘six-month eviction moratorium’ announcement, Prime Minister Morrison has reiterated that banks must do all they can to support tenants & landlords – urging international banks to provide the same level of support as their National counterparts. ### For More Information For more information on the announced mandatory Code of Conduct for Commercial Landlords & Tenants, please contact the Archer Gowland office on (07) 3002 2699. ![Ian Walker](https://blog.agredshaw.com.au/hubfs/IW%20(2021)%20-%20HubSpot%20(1).png) ### Written by [Ian Walker](https://blog.agredshaw.com.au/author/ian-walker) As Executive Chairman, Ian is a trusted Professional Services practitioner with over 25 years’ experience within the Accounting industry. Working closely with his clients to form long-term partnership, Ian provides high-level strategic advice across all areas of Accounting, Business Advisory, Superannuation, and Taxation. Ian is proud to partner with many SME & Family-owned businesses to provide comprehensive and bespoke strategies to help address the challenges and complexities they encounter through day-to-day operations & management. 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