Melbourne’s small businesses unable to pay rent, again

In March, as the coronavirus pandemic was taking hold, Fang Lu knew there was no way she’d be able to pay the month’s rent on her small beauty salon and café in Balwyn.

Her takings had shrivelled to almost nothing — forcing her to shut her doors, or open at a loss.

But she says her landlord wasn’t interested.

Instead, she was sent a breach notice — with a rent increase, a higher security bond, and penalties for late payment.

Months later, she said her landlord was still pushing her for money, as they demanded to know why she had not opened her doors, and stated she had “failed to mitigate her losses”.

“I’m a single mum with three kids. I have nothing left to put into the business. I’ve told the landlord all this, and still they couldn’t show any sympathy.”

The National Cabinet had struggling small businesses in mind when it introduced the Code of Conduct for Commercial Leases in April.

It requires landlords to consider rent relief in proportion to their tenants’ lost revenue, and to negotiate in good faith. It also prevents landlords from evicting tenants until October.

Ms Lu’s landlord did not respond to questions from the ABC.

But her lawyer, Spiro Politis, told the ABC some landlords are blatantly ignoring the Code, and squeezing small business tenants.

“They just don’t have the resources to be able to pay. So come 30 September, when the moratorium on evictions expires, it’s either going to be a bloodbath, or there’s going to be an outbreak of common sense,” he says.

Big landlords accused of being unsympathetic

But it’s not just small landlords. Shopkeepers at Westfield in Doncaster say the corporation is playing hard.

Several Westfield traders have confirmed to the ABC they have been given no reduction in rent, despite a huge reduction in foot traffic.

“I feel they’ll only do something when they have to,” said Ray Chan, owner of the Nosh eateries in Canberra and Melbourne, which includes an outlet at Westfield Doncaster.

Mr Chan says while other shopping centres have been understanding during the crisis, and willing to support businesses through it, Westfield is different.

“I think for them, it’s about the bottom line, making sure that they appease the shareholders or whatever it may be,'” he says.

“And I think it’s being felt across the whole shopping centre in general.”

‘We wanted empathy and kindness’

Another affected Westfield tenant is beauty salon owner April Brodie, who said the group’s parent company Scentre Group offered her terms that will drive her into bankruptcy.

“I feel betrayed,” says Ms Brodie, whose beauty salon has been closed since March.

After months of trying to get an answer out of the Sydney head office, she finally received Westfield’s offer last week: half her rent from April to June would be waived, with the rest to be paid off beginning in October.

Ms Brodie said there was no negotiation. She alleged Scentre gave her seven days to sign, or that the offer would be withdrawn. She added that even if she agreed to the deal, she would never be able to pay it.

“We didn’t want anything for nothing. We wanted to be able to work with them. We were looking for empathy and kindness, and someone who wanted to invest in us and keep us there.”

Scentre Group said the offer to Ms Brodie was “…an example of the Code of Conduct being followed”.

“We have said right from the start that it will take some time for us to work through these conversations with our retail partners, but we are committed to doing this with the empathy the community expects of us,” John Papagiannis, Scentre’s director of leasing and retail solutions, told the ABC.

He rejected assertions there was no negotiation.

“[We] engaged in direct correspondence after our offer of 6 July … and after being told by our retailer that she was not in a position to sign the documentation given the Melbourne restrictions, we told her to stay safe and we would pick up our discussions with her after the lockdown,” Mr Papagiannis said.

But Ms Brodie has fears that will be too late to save her from bankruptcy.

“I have worked for over 30 years, I’ve put my heart and soul into my business, and I will have nothing,” she said.

“And not only will I have nothing, my team will have nothing. So there will be multiple people that will lose their homes, their cars, and will affect their children’s future.”

Landlords are ‘stonewalling’, says industry body

The Franchise Association said it has received numerous complaints of hardline tactics by corporate landlords during the crisis.

“It’s the larger shopping centre, corporate landlords that are providing the most stress and most difficulty for tenants,” Mary Aldred, association CEO, told the ABC.

“They’re asking for years and years’ worth of financial information, or asking them to sign confidentiality agreements to simply negotiate,” she says.

“They need to be reasonable and fair. And if they’re not, then small businesses are just not going to be able to make it through to the other side.”