Small businesses float a national rent relief plan for economic recovery
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Small businesses want a national approach to rent relief during lockdowns, including federal government-backed loans to help repay debt racked up from lease deferrals.
Council of Small Business Organisations Australia interim chief executive Alexi Boyd said a new plan assisting employers across the country needs to be introduced to ensure small businesses are not left at the mercy of negotiating with large landlords.
Business groups want locked down companies to be supported more.Credit:Dominic Lorrimer
“What we’re finding is rent is one of the biggest costs to businesses, our members are telling us it is accumulating,” Ms Boyd said. “Potentially it is the rent that breaks the back of business who owe tens or hundreds of thousands of dollars in debt from deferral systems … many are still paying back deferred rent from the last lockdowns.”
The NSW government introduced a rent relief package late on Friday, including reintroducing a code of conduct for commercial leases to help ensure rent relief for coronavirus-impacted tenants and creating a $40 million hardship fund to support landlords who provide rental waivers. The Victorian government has made it mandatory for landlords to provide rent relief proportionate with turnover declines and has an $80 million fund to assist landlords.
But Ms Boyd is concerned landlords and tenants nationally are still left to negotiate by themselves to secure a rent reduction.
“The code of conduct last time didn’t work as some landlords didn’t come prepared to negotiate in good faith,” she said. “We need to make the system that’s now in place more robust and more fair and equitable for the tenant, especially those that are small and don’t have much power in this situation.”
As part of COSBOA’s proposal, businesses would undergo a hardship test administered by state and territory tribunals to determine whether they are financially suffering enough to justify rent relief. After being assessed as having lost enough turnover, landlords would be required to cut the rent or allow a tenant to exit their lease without penalty. Tenants would have outstanding rent forgiven.
The organisation has also requested rent assistance, supported by the state government, to cover the gap between what the negotiated payment is and the current rent for two full quarters. This is similar to the NSW and Victorian schemes.
Under COSBOA’s plan, affected businesses would then be able to take on a new recovery-focused loan from the government “to cover verifiable rent, mortgages and tax debt which have been accumulated due to the impact of lockdowns” repaid as a portion of annual turnover.
However, the Property Council of Australia NSW executive director Luke Achterstraat has already raised concerns about rent waivers reintroduced by the NSW government, saying the commercial property sector provided $15 billion worth of support to tenants during lockdown last year and small owners will struggle.
He is already concerned the assistance provided is a “one-size-fits-all” strategy.
“Many commercial owners are still providing ongoing support to tenants affected by the 2020 lockdowns, with considerations in place,” he said. “We welcome government looking at relief for small landlords. Not all commercial owners are big businesses, a lot are mums and dads who have it as their nest egg.”
National employer Ai Group chief executive Innes Willox said the state and federal governments had jointly financed many grants to support businesses that could be used to pay rent as well as introduced mediation and landlord tax relief.
“Ai Group is open to a quick consideration of the adequacy of existing arrangements and for the national cabinet to consider supporting a harmonised approach,” he said.
Australian Chamber of Commerce and Industry chief executive Andrew McKellar said rental assistance measures were critical through lockdowns.
“The prompt and coordinated approach between federal and state governments has been fundamental to supporting both business and landlords who have been significantly impacted by restrictions. These support mechanisms must adjust as required to ensure that when lockdowns end, our economy can bounce back strongly,” he said.
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