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.
