As part of its response to the COVID-19 pandemic, the Federal Government has announced a National Code of Conduct for commercial leases.

The National Code is mandatory to all landlords and tenants that it applies to. The function of the code is to provide a framework to guide landlords and tenants in working out arrangements under their leases during the COVID-19 pandemic. The code is premised on principles of good faith, working together, and proportionate loss sharing; recognising that landlords and tenants share a common interest in maintaining leasing arrangements during the COVID-19 pandemic and through to the recovery.

The overarching objective of the code is to enable affected tenancies to ‘hibernate’ during the COVID-19 pandemic, as part of the Federal Government’s hibernation strategy for businesses.

The code does not apply to all commercial leases. Financial tests apply (it is for Small to Medium Enterprises significantly affected by the Federal Government’s actions in response to the COVID-19 pandemic).

The code sets out 14 key Leasing Principles, which are summarised and explained in the table below. These principles will be implemented in detail by the State and Territory Governments in legislation, which is expected to be uniform in its approach.

You can read the guide here.