Business closures and job losses have hit the country hard. Star Weekly spoke to Woodend resident and associate director at Blue Rock Law Lauren Smyth about how business owners and those in the property market can handle shutdowns of many services and facilities.
With the recent government announcement of shutdowns on clubs, beauty salons, arcades, casinos, cinemas, etc, what short term and long term effect will the closures have on these businesses?
The short term effect is that business owners will have an immediate halt on income which will flow through and cause personal financial distress on families who won’t be able to pay mortgages, rent and keep up with everyday expenses such as utility bills and groceries. The long term effect is that businesses won’t be able to recover – that’s a scary proposition for many people who have spent years and made personal and financial sacrifices building their businesses.
The property market looks to be affected as well with auctions and open house inspections closed – how will this impact those wanting to sell or buy a new home?
The stop to open-house inspections will make it difficult to sell, especially when house inspections are a key part of the marketing campaign. Virtual house tours or video viewings could be an option but there are risks with buying a property that you haven’t physically viewed. If you want to buy a house that you haven’t viewed, it is critical that you get a lawyer to look over the contract of sale before you sign.
Do you believe people should hold off on selling/buying a new home until the virus somewhat stabalises?
The impact from COVID-19 will probably cause the property market to slow. Unfortunately for sellers, we could see a decline in property values and it won’t be a good time to sell. We have record-low interest rates – those in the market with secure jobs and stable financial circumstances will choose to take advantage, but many will be reluctant to take out new mortgages if they are worried they will be unable to service the loan. Home owners should avoid ‘panic selling’ and buyers should avoid ‘panic buying’ but keep risks in perspective – assess your own circumstances and reach out to experts – accountants and financial advisers are an invaluable source of advice.
What people are coming to you for help at this moment?
At Blue Rock we act for a lot of SMEs and most of my clients are business owners. Some of these people have been forced to shut down their businesses because of the government’s combative measures to stop the spread of COVID-19 and others are still able to trade but experiencing significant drops in revenue because their customers are staying at home under government recommendation, or they have been forced to remodel their business operations which is causing trading downturns – for example, cafes operating as take-away outlets only.
What are the major concerns?
The immediate and significant financial distress that no one forecast a few months ago. Many businesses won’t survive an indefinite shutdown or prolonged period of poor trading but are still facing ongoing obligations like lease-related expenses such as rent and outgoings. If they don’t pay these costs, landlords could terminate their leases, they risk losing security deposits, bank guarantees and having to pay landlords for lost rent-income and in some situations, individuals could be personally liable for the tenant’s breach. There are also staff considerations and supplier issues.
What are business owners options?
My advice to all business owners is to ask their landlords for rent abatements for at least the next three to six months. Most landlords should be willing to give their tenants rent relief so there is a better chance that tenants will still have viable businesses on the other side of this pandemic. The alternative is that landlords will risk having empty shops, months with no rental income and they will be paying costs that they would usually pass on to tenants. Empty shops would also have a serious impact on tourism and our local economy.
How can we bounce back from this crisis?
The headlines are pretty grim at the moment and the uncertainty is making us worried and feeling rattled, but we often see the best shine through in a crisis and that’s starting to show already within our own community – we’ve got people reaching out to help the elderly and those in need and if you were at Coles in Woodend last weekend you might have been lucky enough to catch the Woodend Warblers singing to shoppers. We have a strong-knit community with compassionate and caring people. That will help carry us through but as the government lifts restrictions and things go back to ‘normal’, individually we need to think locally – shop locally, eat at our local cafes and restaurants, advocate for our community and local causes. Our council and local businesses also need to adopt an entrepreneurial mindset and think about ways to support our economy and bring people back to the region. We’re in this together.
Is there anything else you would like to say?
Our team at Blue Rock has put together a really good summary of the relief options and assistance available for businesses during the COVIC-19 crisis. This is free and available here: www.bluerock.com.au/covid-19. I am also offering assistance to tenants in seeking rent relief. If you need help or would like to have a chat, please contact me on 0412 958 166 or lauren.smyth@thebluerock.com.au.
