| 18 Aug 2022
NTIA comments on Government release of Commercial Tenants & Landlords Code of Conduct

MUMBAI: Over the past couple of weeks the Government has been working closely with a small steering group and others to develop a draft Code of Conduct for Landlords and Tenants to resolve the current impasse across sectors on rent payments where there is no income due to Covid - 19 Restrictions. This code seeks to embed the best practice already occurring in the sector and ensure it is accessible to a wide range of businesses. It encourages discussions between landlords and tenants over rental payments during the coronavirus pandemic and provides guidance on rent arrears payments as well as the treatment of sub-letters and suppliers.

Michael Kill NTIA CEO says:

“The overarching point is that there have been codes in the Landlord and Tenant space, designed to even up the landlord and tenant relationship and promote fair behaviour, for absolutely years. They have, at best, limited influence, and even where they do make a mark that is usually peripheral and over a long timespan (many many years); most of the provisions are almost universally ignored, especially by the more aggressive landlords.

The Service Charge Code, for example, which sets out fair practice in the administration of service charges in commercial lettings, was so readily ignored for so long, that RICS was effectively forced to elevate its status in 2018 to a ‘Statement’ (rather than a mere ‘Code of Practice’), so as to give it some bite. That meant that departure from the Statement by RICS members could potentially lead to disciplinary action. Even there, the get out is that the terms of the lease still prevail.

The overall aim here seems to be to get things ‘open’ soon. Whilst stretching out the various immediate protections for a short while. Then leave everyone to sort themselves out, against a non-binding framework of proper behaviour, and the remnants of Government financial support packages.If that is the case, then it’s wishful thinking, and the fundamental conundrum remains.”

IS AUSTRALIA'S MANDATORY CODE OF CONDUCT FOR COMMERCIAL TENANCIES A BETTER MODEL? COVID-19 has threatened all kinds of legal relationships, including many commercial tenancies. In Western Australia, the State Government has acted to address this situation.

The Western Australian Government has now introduced the Commercial Tenancies (COVID-19 Response) Regulations 2020 (Regulations) which implement the National Cabinet’s Mandatory Code of Conduct (Code). These Regulations follow the enactment of the Commercial Tenancies (COVID-19 Response) Act 2020, which sets out rent relief principles that apply to small commercial leases during the COVID-19 pandemic.

The NTIA presented this as a potential model to follow in the consultation with the Government over the Landlords and Tenants Code of Conduct but they have supported a model which is only voluntary.

To leave everyone to just sort themselves out, against a non-binding framework of proper behaviour, and the remnants of Government financial support packages is a gross underestimation of the current situation. The moratorium extension is welcomed but will only compound the situation with further rent arrears building up over time, placing many businesses in further debt! The government needs to consider the lasting effects of uncertainty on the sector as a whole. The Night Time Economy and Events Sector need some clarity on when businesses will be able to re engage and what support will be available during the period that they will remain closed.