The Property Council of Australia has voiced concern towards the NSW Government for reintroducing mandated rent waivers as part of a reintroduction of the Commercial Code of Conduct today. The commercial property sector provided $15b support to tenants in 2020 and is now faced with further rent waivers and government intervention.
NSW Executive Director Luke Achterstraat said in 2021 large commercial owners across NSW were demonstrating support above and beyond the requirements of the 2020 code.
"Our members recognise the importance of supporting their tenants and are overwhelmingly acting to ensure their tenants viability through this lockdown to those in genuine need, on a tailored case-by-case basis," Mr Achterstraat said.
"This one-size-fits-all intervention is a blanket approach in a challenging time when targeted support for those in genuine need is better suited. Government intervention in contracts not only risks the existing commercial relationships, but it also harms the potential for the economic recovery of the state on the back of this lockdown."
Mr Achterstraat said today's announcement imposed an unfair and costly burden of government-imposed lockdowns on the property sector.
"Many commercial owners are still providing ongoing support to tenants affected by the 2020 lockdowns, with considerations in place. This intervention convolutes those existing hardship arrangements further and fails to recognise the generous support that has been and continues to be provided.
"Under the last iteration of the code small mum and dad owners were left with the mortgage payments and no retirement income, while some tenants recorded profits on the back of JobKeeper.
"The new $40m Hardship Fund is a welcome relief to small commercial property owners who are hardest hit with this policy, but is only a step in the right direction in supporting small property owners against the resources of large tenants with turnovers of up to $50m.
"Both the banks and the retailers association have recognised that support should be targeted to genuine small businesses with a turnover up to $5m, it is unfathomable why this policy applies to businesses with a turnover up to $50m.
"Commercial property owners were being asked to do far more than the banks and many worst effected businesses in 2020 were in fact small commercial owners whose large tenants refused to pay rent in the Commercial Code of 2020.
"When international capital investment decisions need to be made, NSW needs to present a credible environment for business, and government intervention in commercial contracts does exactly the opposite."
Mr Achterstraat said he did not want the code around for longer than the lockdown period.
"Let it be clear that the return of the code must have a timeframe and should not extend past the current lockdown.
"Going forward, governments will have to wean themselves off intervening in contracts, hurting commercial relationships. Commercial owners are integral to the fabric of vibrant and functioning cities and businesses, with their own financing and commercial obligations to meet."
Mr Achterstraat said eventually contracts would need to be honoured.
"This type of government intervention in commercial contracts must never happen again. Where governments intervene, governments will have to pay.
"There are as many small commercial owners as there are large commercial owners, and as many large tenants as there are small tenants, so intervention in the contracts harms the small owners as much as it helps small tenants."
The Property Council will work closely with the NSW Government on the design of the enabling regulations and will represent its members in these discussions.
