Calls to expand rent holiday to all SA small businesses

Business leaders are calling for rent relief measures to help small businesses survive, in the wake of Adelaide City Council’s decision to give a rent holiday to its own tenants.

Mar 24, 2020, updated Mar 24, 2020
Photo: Tony Lewis/InDaily

Photo: Tony Lewis/InDaily

Lessees of Adelaide City Council-owned buildings and Central Market traders will have their rent waived for three months, under a $4 million support package to help city businesses cope with the economic and social impacts of COVID-19.

The State Government is expected to unveil further small business stimulus measures in the coming days, but Adelaide business leaders say swift and decisive action is needed for all commercial tenants.

Co- Founder and Joint Managing Director of Adelaide stockbroking company Baker Young, Alan Young, said landlords should share the burden being placed on small businesses.

He said the cost to property owners of a rent holiday that allowed businesses to remain viable during the crisis would likely outweigh the costs of fitting out tenancies for new businesses, or having their property vacant when existing tenancies failed.

“All of the relief so far has been around government providing some support for general operating expenses and for wages by way of giving pay as you go tax back and encouraging banks to defer loan instalments, but there has been nothing around rent,” Young said.

“You’re going to end up with a situation otherwise that when we recover, the tenants won’t be left standing because they went out of business because they couldn’t afford the rent and that’s not a good long-term solution for any property investor.

“This is like being hit by a natural disaster and they need relief to recover at least for a period of up to six months.”

Young said the GFC showed that strong and bold action to support small and medium enterprises helped them weather the storm so they could bounce back when the crisis passed.

“It is the morally correct thing to do but it is also in our self interest, in the sense that as we emerge from this we are going to want to have the components in place to reignite the economy – and they are small and medium-sized businesses,” he said.

The Federal Government announced a second stimulus package on Sunday, which includes unsecured business loans of up to $250,000 with repayments deferred for up to six months and up to $100,000 to eligible small and medium businesses and not-for-profits that employ people.

Business SA CEO Martin Haese welcomed the changes but said more assistance would be required to keep businesses operating.

“We are yet to see any relief measures announced on rent and utilities and this is something we remain hopeful of seeing in the further support packages from either the Federal or State Government,” he said.

The Adelaide City Council package, which was approved at a special council meeting last night, also provides three months free rent to community groups such as sporting groups or schools that lease clubrooms on the park lands.

Other supports to be introduced by the council include temporarily waiving the Rundle Mall marketing levy charged to traders, deferring rate payments under hardship provisions and making on-street parking regulations more flexible.

The council will also work with Business SA to establish a “small business task force” to support businesses in the CBD and North Adelaide to adapt and recover from the economic impact of COVID-19.

Lord Mayor Sandy Verschoor said the package would have a “significant impact” on the council’s budget, which is set to breach debt ceilings by early next year.

“We take our duty of care to public health and our duty to support city businesses very seriously,” she said.

“This is the time for us to make effective decisions that will support businesses and residents as much as we possibly can, as well as the most vulnerable within the community.”

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Councillors unanimously voted to pass the measures, but some raised concerns that the businesses that would benefit from the rent relief were not those most in need.

Property Council SA Executive Director Daniel Gannon said conversations were already taking place between landlords and tenants about how they could work together to survive.

He said the Property Council had been working closely with the State Government on a number of stimulus measures that would involve landlords and tenants.

“The reality is that we’re all in this together and have a shared interest in seeing businesses make it through these very challenging times,” he said.

“Our experience is that landlords will seek and are seeking to work with the tenants to help them through times like these, and obviously circumstances will vary from business to business, but government is also a major stakeholder and needs to be involved to provide relief from taxes and charges that are levied on to property owners and then passed on to tenants.

“The state government has had a strong appetite to look at a solution in this space and I’ve got no doubt they’ll be making announcements in the coming days.”

Premier Steven Marshall said his government supported any industry move to lower immediate costs for commercial tenants during this crisis.

“We have been in regular contact with the Property Council to discuss ways their members can be involved,” he said.

“In addition to the State Government’s immediate $350 million economic stimulus package designed to help keep businesses’ doors open and locals in jobs, we are working through the details of a second stimulus package that will further ramp up this effort.

“Everything is on the table and we hope to make an announcement in coming days.”

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