As reported previously (see our previous articles on rent relief here and here) the Commercial Tenancy Relief Scheme (Scheme) operates in Victoria to provide the framework for rent relief negotiations between landlords and tenants for COVID-19 affected tenancies.
The Regulations implementing that Scheme were varied as of 29 September 2020 as follows:
- Relevant period extended: The relevant period is extended to 31 December 2020. The relief offered only takes effect from the date a landlord receives a tenant's request.
- Deferred rent payments: Deferred rent payments must commence no earlier than 31 December 2020 – this applies to any previous agreements between a landlord and a tenant with respect to the commencement of deferred rent payments.
- Tenants can revisit agreements: Under the revised Regulation 11, tenants are entitled to make an application for subsequent relief if under a previous agreement with a landlord entered into prior to 29 September 2020, the relief does not allow for at a minimum the proportionate rent relief commensurate with the decline in trade.
- 'Eligible Lease': 'Eligible Lease' is now defined in the Regulations (previously this was contained in the legislation). The definition remains the same other than removing the requirement that tenants must be 'employers' – this now entitles sole-traders to make a claim under the Scheme.
- Tenant's request for relief: In addition to the previous information that tenants were required to provide to landlords when making a request for relief, the request must now also set out a tenant's decline in turnover that is associated only with the premises, and provide at least one of the following as evidence of the downturn in trade:
- extract from tenant's accounting records;
- the tenant's BAS;
- statements issued by a bank; or
- a statement by a practising accountant.
- Landlord's offer of relief: Previously landlords were required to offer relief for the entire rent relief period (29 March 2020 to 29 September 2020), however under the new Regulations the rent relief need only be offered from the date a tenant's request is received. Accordingly, it is critical for any tenants seeking relief from 29 September 2020 to submit a request as soon as possible.
- Rent relief to match decline specific to single premises: Previously a tenant's decline in turnover associated with the premises was only one of a number of factors a landlord was required to take into account when making an offer of rent relief. Now under Regulation 10(4)(ba), a landlord's offer must, at minimum, be proportional to the decline in a tenant's turnover associated with the premises.
- Powers of the Small Business Commissioner: There are now extensive Regulations dealing with the dispute resolution procedure, importantly, the ability for the Victorian Small Business Commission to now make binding orders.
It should also be noted that an eligible lease must still have been in effect prior to 29 March 2020 – any leases or licences entered into after that date are not subject to the mandatory relief scheme under the Regulations.
If you are a landlord or tenant who has already concluded agreement in respect to rent relief, or you are still in discussions in respect of rent payable through the relevant period and have any queries regarding the impact of on your business, please contact Richard Skopal.