Following an announcement made earlier this year, the Victorian Government (on 1 February 2022) released the Commercial Tenancy Relief Scheme Regulations 2022 (Regulations) to extend the Commercial Tenancy Relief Scheme (CTRS) until 15 March 2022.
The purpose of the extended CTRS is to provide rent relief to small and family businesses which remain impacted by COVID-19.
The key points to note from the Regulations are as follows:
- the extended CTRS operates from 16 January 2022 to 15 March 2022
- eligibility is limited to ‘small entities’ – being non-profit bodies or entities that reported an annual turnover of less than $10 million in the financial year ending 30 June 2021. The threshold under the previous version of the CTRS was $50 million. If a tenant did not carry on business for the whole of the 2021 financial year, it would be deemed to be a small entity if it can demonstrate that its annual turnover for the 2022 financial year is likely to be less than $10 million
- a tenant must also satisfy the “decline in turnover test” set out in the Regulations in order to demonstrate eligibility for rent relief under the extended CTRS. Essentially, a tenant must show that its January 2022 turnover declined by 30 per cent or more as compared with its January 2020 turnover, although there are a number of alternative comparison turnover methods set out in the Regulations (as in the previous version of the CTRS)
- a tenant will only receive the benefit of the protections provided by the CTRS if it (1) makes a compliant request for rent relief to the landlord and pays a portion of the rent due under the lease equal to the rent less the percentage decline in turnover, and (2) pays rent and outgoings in accordance with a rent relief agreement (once entered into). Failure to comply with these payment requirements will constitute a breach of the lease in respect of which a landlord can take action
- rent relief requests must be in the same form as required in 2021. Providing a request complies with the Regulations and all the necessary evidence is provided, the rent relief period is taken to have commenced on 16 January 2022 and will end on 15 March 2022. There does not appear to be any cut-off date for making the requests, but erring on the side of caution, requests should be made as soon as practicable
- if the landlord defers any rent, a tenant must be offered an extension of the lease equivalent to the period for which rent is deferred on the same terms that applied before 16 January 2022
- deferred rent for small entities is not payable until after 15 March 2022 (whether that be rent deferred during 2020, 2021 or 2022) – providing a request for rent relief is made under the extended CTRS
- for tenants who are eligible to seek relief under the extended CTRS, any rent increase or review due to take place between 16 January 2022 and 15 March 2022 will be void and may never be claimed by the landlord.
If you have any questions about the Regulations, please contact us or send us your enquiry here.
Author: Alana Giles
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.