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Update: Victorian Government reintroduces COVID commercial tenancy relief scheme

04 August 2021

#Property, Planning & Development, #COVID-19

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Update: Victorian Government reintroduces COVID commercial tenancy relief scheme

The Victorian Government has announced the reintroduction of the Commercial Tenancy Relief Scheme (CTRS) and the Commercial Tenancy Relief Scheme Bill 2021 (Bill) was read in Parliament on 3 August 2021.

The purpose of the Bill is to enable the making of regulations to mitigate the effect of COVID-19 in relation to certain eligible commercial leases and licences, and to reinstate mechanisms to resolve disputes between parties to eligible leases.

If passed, the Minister for Small Business will have the power to make regulations regarding various matters, including:

  • prohibiting termination of eligible leases
  • changing any period under an eligible lease in which a party must or may do something
  • changing or limiting any other right of a landlord under an eligible lease, or an agreement related to that eligible lease
  • exempting a landlord or tenant from having to comply with an eligible lease or an agreement related to that eligible lease
  • imposing new obligations on parties to an eligible lease, including requiring them to negotiate amendments to the lease
  • requiring parties to an eligible lease to participate in mediation at the Small Business Commission (SBC) and obtain a mediation certificate before commencing legal proceedings in the Victorian Civil and Administrative Tribunal or a court
  • making orders directing landlords of eligible leases to give or agree to give specified rent relief to tenants
  • setting out the process for making rent relief applications and providing supporting documentation, including requiring information to be verified by statutory declaration
  • specifying pre-conditions which must exist or be met before a rent relief application can be made
  • specifying the criteria which must be applied in deciding rent relief applications.

The Bill also indicates that a tenant’s obligation to repay rent deferred under a lease, which was an eligible lease for the purposes of the 2020 regulations, could be frozen.

It is not clear from the Bill how a tenant will demonstrate eligibility for the new CTRS, but a press release issued by the Premier’s office on 3 August 2021 suggests that:

  • rent relief for eligible tenants will be calculated by comparing their turnover for the final quarter of the 2020/21 financial year with their turnover from the final quarter of the 2018/19 financial year
  • tenants will be eligible for the scheme if their drop in turnover is greater than 30 per cent. The percentage decline will determine the initial amount of relief available
  • special arrangements will be introduced for businesses not operating in 2019
  • tenants will only need to satisfy an eligibility test once in order to receive assistance
  • smaller landlords who can ‘demonstrate acute hardship’ will be eligible to apply for payments from a $20 million hardship fund, and landlords may receive land tax relief
  • commercial landlords will be unable to evict eligible tenants without obtaining a direction from the SBC. It’s not yet clear to us whether landlords will be able to terminate eligible leases where there are breaches which pre-date 28 July 2021.

We expect the Bill to pass through Parliament this week and regulations to be published shortly thereafter. We will provide a further update when the regulations are published.

Author: Chris Brodrick & Alana Giles

Disclaimer
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.

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