Commercial Tenancy Relief Scheme

The Victorian Government has announced the reintroduction of Commercial Tenancy Relief Scheme for commercial Tenants and Landlords addressing the effects of Coronavirus lockdowns and making it a requirement for Landlords to provide relief to Tenants affected by Coronavirus. The legislation will soon be passed and be dated from 28 July 2021 to ensure rent relief is available immediately.

The Scheme will be available to small and medium size businesses who have an annual turnover of less than $50 million that turnover has had a decline of 30 percent due to Coronavirus.

Rent relief periods

Where the tenant applies and supply evidence to the Landlord on or before 30 September 2021, rent relief period is 28 July 2021 to 15 January 2022. However where the Tenant applies after 30 September 2021, the rent relief period will be from the date the tenant applies to their landlord to 15 January 2022.

Landlords

Landlords are expected to provide relief to their tenants on a proportional basis with the downturn in the Tenant’s reduction in turnover. Of the rent reduction amount, half must be waived with the other half able to be deferred. Landlords will be able to access an $120 million fund in respect of the rent relief via tax relief for Landlords.

Small Landlords experiencing hardship as a result of tenancy relief scheme are able to apply for a grant from $6,000.00 up to a maximum of $10,000.00 through the Business Victoria website.

Any deferred amounts of rent will be payable over the remainder term of the lease or 24 months, whichever is longer.

Tenants and Landlords are being encouraged to enter into good faith negotiations to come to an arrangement between themselves. If tenants and landlords are unable to come to an agreement, the Victorian Small Business Commission (VSBC) will assist with the negotiation by providing advice however the VSBC is no longer offering free negotiation and mediation support.

Tenants

When participating in these negotiations, it is recommended you provide sufficient and accurate information about your business and its current turnover to ensure a fair and genuine agreement can be reached. It is recommended this agreement be entered into with a written document.

Documents that can support a Tenant to demonstrate the downturn in their business include:

  • Extracts from the tenant’s account records;

  • Business activity statement(s);

  • Tenants bank statements; or

  • A statement prepared by a practising accountant.

Tenants who are struggling to pay the rent they currently owe are advised to pay what rent they can and seek independent advice from their accountant or legal advisor. It is important that Tenants do not stop paying rent as a lease is a legally binding agreement. If a tenant wishes to exit the lease, they should seek legal advice as to the best pathway to achieve this.

Further to this Scheme, Landlords who have provided rent relief as a result of COVID may be eligible for Land Tax relief as well. You can visit the State Revenue Office website to determine if you are eligible.

 

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