An extension of the commercial leasing code of conduct by state and territory governments would impose an extra $4.8 billion in costs on commercial property owners, according to the Property Council of Australia.
This is in addition to the $4 billion impact of the leasing code on commercial landlord revenues for the five-month period from April to September.
This could threaten the viability of many small and mid-sized commercial property businesses.
Property Council Chief Executive Ken Morrison said the introduction of the commercial tenancy codes of conduct was an “extraordinary intervention”.
“Extending the Code now would be disproportionate,” he explains.
“The Code is unlike any government measure enacted on one sector of the economy in modern Australian history.
“No other advanced economies around the world have made a single sector disproportionately shoulder the cost of recovery.
“While the Code may have been justified during the extraordinary time in which it was conceived, it involves one part of the business community, many of them small owners, being legally obligated to give money to another part of the business community.
“No other sector of the Australian economy has faced a similar demand to waive legally incurred obligations.
“By contrast, the only other sector asked to assist through this time, the banking sector, has provided loan deferrals to SME businesses, but not loan waivers or interest free periods.
“Commercial property owners are highly motivated to support existing tenants who are experiencing hardship and were doing this prior to the code’s implementation – we don’t need extra regulation to do this.
“In most jurisdictions the worst of the pandemic is clearly behind us and the economy is re-opening.
“We have also seen perverse impacts from the code where some high-profile tenants have refused to pay rent even though they are legally required to do so.
“The sanctity of the lease covenant has been a fundamental tenet of the Australian legal system and its primacy should be restored as soon as reasonably practicable to restore confidence in the market.
“Extending the commercial leasing code will add billions of dollars in costs for property owners and investors with potentially serious consequences for the economy and financial system,” Mr Morrison concluded.
