Reasonable Rents !

Families renting have protection to stop landlords evicting them onto the street if this Coranavirus lockdown stops them from being able to pay the rent, but what a lot of breadwinners fear is mass unemployment when the virus threat is finally over.  They wonder if the firms they worked for are going to be still in business when the lockdown ends.

Legislation is being put in place to ensure that happens.  Similar protection applies to commercial tenants and once again there is a requirement for both sides to negotiate.  This forced closure has stopped the cash flow and the state government has made it illegal for the owners of premises used for shops,cafes, gyms, hairdressers, restaurants, offices and industrial sites to use eviction because of unpaid rent.

Commercial landlords will not be able to terminate a lease because rent is not being paid and must offer tenants rent relief proportionate to the tenants decline in turnover.  This is part of a six month relief package which will cost the New South Wales government $440 million.  This will take effect through land tax waivers or rebates to be split between business and residential landlords.

Rent for the premises used to conduct a business is usually a major item of business overhead and this seems a practical way of splitting the outcome of the lockdown which has forced trading to cease between the business owner and the landlord.  There is the expectation that both parties will approach the negotiation in a reasonable frame of mind and there js every expectation that the vast majority of businesses should be able to resume when the lockdown ceases.

The other component on a favourable outcome is the attitude of the banks.  Most small businesses need an overdraft from time to time and there is the expectation that when the lockdown ends it will take some time for normal turnover levels to return  Most families have been forced to dip into their savings nest egg and that mood of austerity is likely to prevail until savings levels are again rising. It would be helpful if the banks were accommodating in this respect.

We were experiencing a mini recession before this virus roared out of China and many shopping centres had a plethora of empty shops.  That dismal aspect will be unhelpful to the recovery and owners would be wise to negotiate a realistic rent to encourage new businesses to overcome the expense of fitting out and establishing a new trade.  The fact that many national brands have not survived this downturn will leave major space vacant and some centres will be looking for a market leader to fill that gap.  Thriving surrounding shops are usually the attraction that makes that happen.

The government has made it clear that the recovery will depend on meaningful negotiations to restore trading profitability.and that applies equally to home rentals and the business community.  The end of this virus lockdown is probably a lot closure than the pundits have been predicting  !