The Victorian government has recently extended the Commercial Tenancy Relief Scheme (the Scheme) which was introduced to assist landlords and tenants faced with financial difficulties as a result of COVID-19.
What are the Main Changes?
The main change is to extend the operation of the Scheme from its previous end date of 29 September 2020 to 31 December 2020. A new procedure has been introduced to request rent relief for this period. Importantly, a new request for rent relief will only apply from the date of the request.
Under the amended scheme, commercial landlords will be required to provide rent relief in proportion to the fall in turnover being experienced by eligible tenants from the date a tenant makes a written application to their landlord within the period noted above.
Where can I get more Information about these Changes?
The Victorian Small Business Commission has prepared a number of useful on-line resources including a FAQ page and a draft template letter which can be used by tenants. These resources can be accessed here:-
For further expert legal commentary on the operation of the amended Scheme, I can recommend the blog page by Sam Hopper, barrister, which can be accessed here:-
What Does the Scheme Provide?
For commercial tenants and landlords, the Scheme provides the following support:
- A moratorium on commercial tenancy evictions for the non-payment of rent for small to medium enterprises with an annual aggregate turnover under $50 million that have experienced a minimum 30 per cent reduction in turnover due to coronavirus (COVID-19), commencing from 29 March 2020;
- A freeze on rent increases during the moratorium for commercial tenants;
- A rent payment waiver or deferral in proportion to a commercial tenants’ reduction in turnover due to coronavirus, to be negotiated between the tenant and landlord; and
- A free mediation service for commercial tenants and landlords, accessed through the VSBC, to support fair tenancy negotiations.
When May a Tenant make a Further Request for Rent Relief?
A tenant may make a further request for rent relief if:
- its financial circumstances have materially changed; or
- there is a rent relief agreement in place that is not proportionate to the tenant’s decline in turnover; or
- the agreement does not apply from the date of the request to 31 December 2020.
Previously, there was no requirement in subsequent rent relief negotiations to provide a waiver of rent (ie it could all be deferred). However, this has been changed so that half of the subsequent rent relief must be by way of waiver.
If you wish to discuss making an application for rent relief, or any aspects in connection with the operation of the amended Scheme, please feel free to contact me to discuss.
Phone: (03) 9020 7344
About the Author
Matthew Baker-Johnson is an experienced commercial and property lawyer who regularly advises parties in relation to leasing transactions. He is a member of the Law Institute of Victoria (LIV).