2020 is a year of unprecedented events on a global scale, and as a nation, we are undergoing drastic changes in order to survive. Financially, nobody could have seen the events unfold as they have in the last two months. It’s a time when we either adapt to the changes or fail. No property owner wants to fail, but it is becoming harder and harder to adjust every day. With new regulations and rules regarding public gatherings to control the spread of the pandemic, many businesses have simply gone into hibernation for an indefinite amount of time. Many will not see the other side of hibernation, and the outlook is uncertain for any commercial property owner who currently has tenants that are forced to close their businesses. There is some relief, however, as the government tries to assist with the everchanging landscape that is 2020.
What changes are taking place?
Australian banks have announced unprecedented relief and protection for commercial property tenants and owners. There are many financial trials ahead for businesses around the country, and with many businesses unable to carry out day-to-day trading, the worst is still yet to come. Tenants are being looked after on a few different levels, as are property owners, however how they will evolve over coming months will be the real test. However, landlords have been warned that if they take a firm stance with tenants, they will not get the full support they may expect.
Bank Loan Payment Deferrals
Many businesses that have bank loans will be able to defer payments for up to six months. However, the consequences of this have not been fully disclosed. Landlords can defer loans; tenants can defer loans, however in the long run, it’s a bandaid solution that could easily backfire come September when the banks expect business as usual; at the end of this whole saga. The threshold for eligible deferral of payments has increased to up to $10 million in loans. Although this opens access to deferrals for an extra 30,000 businesses, what happens next?
Moratorium On Commercial Property Evictions
The Australian Government also announced a freeze on commercial property evictions for six months. This is an excellent relief for those who have businesses that are forced to close, hibernate, or scale back trading. It’s a relief for thousands of businesses. But it’s only going to work if tenants and landlords communicate and work together. While the assistance includes property owners with bank loans, success is reliant on landlords not evicting tenants or ending leases for those affected by the pandemic.