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COVID-19 likely effects for Commercial Property Owners
COVID-19 effect on Commercial Property Owners
The recent government enforced shut down of many small businesses, particularly retail, will impact in some way on commercial property owners.
It is hoped that if all abide by the recent restrictions on congregation and disinfection that the infected parties can be identified, isolated & treated, and we can all get on with life again. On the other hand, if people do not abide by the restrictions on meeting, congregating and disinfection, the virus will continue to affect us all for much longer.
Most businesses that are genuinely viable will be on a solid footing to carry on once this crisis has past. Businesses which were only marginally viable before the crisis are unlikely to be able to weather the virus and start up again once this is all over.
The Commonwealth Government & some State Governments have already put in place certain measures to help small business & employment, which are likely to be hit hardest by the crisis. We understand that there are more measures to come, which will assist business in dealing with their fixed overheads, which obviously include rent.
As this is a National emergency, the Governments are the ones who are charged with managing our social welfare by medical assistance, and our livelihoods by the re-distribution of our national wealth. I do not believe that it is really up to landlords to subsidise business.
However, there will be some delay in businesses actually receiving financial benefits, which I understand are to be tied to the lodgement of BAS. Determining factors for the receipt of benefits will be monthly wages bill and in some cases, the previous year’s turnover.
In the unusual circumstances in which we find ourselves, landlords and tenants will, where appropriate or necessary, need to work together to devise a mutually acceptable way through the commercial challenges that will confront many of us.
In cases of genuine financial hardship it would be in everyone’s best interests to vary or amend payment terms.
However this is not a burden which should be borne by property owners alone, many of whom also have financial obligations to meet.
The respective State and Commonwealth Governments need to play their part- there are many ways that they can provide meaningful assistance including waiving land tax where the landlord provides a matching level of rent relief, deferring BAS payments etc.”
Whilst the Banks have signalled their willingness to assist, as far as I am aware this does not involve the write off of interest payments.
These conditions are unprecedented in our times, so there is no blue print as to how to proceed.
I trust that these thoughts are of assistance.