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Six more weeks of Stage 3 lockdown: what now for leased premises in Victoria?

08 July 2020
With another six weeks of Stage 3 lockdown for Victorians where does this leave landlords and tenants that may have already reached agreement regarding rent relief for the prescribed relevant period (ending 29 September 2020)? What about those yet to reach agreement for the relevant period?
 

The six week lockdown will detrimentally impact on all businesses in Victoria. While the exact impact remains unknown, where does that leave those businesses which have already reached agreement with their landlord in respect to rent relief under the COVID-19 Omnibus (Emergency Measures) (Commercial Leases and Licenses) Regulations 2020 (Regulations)?

Well, Regulation 11 (1) provides that if a tenant's financial circumstances materially change after a variation to an eligible lease has been made or agreed, then the tenant may make a further request to the landlord for rent relief under Regulation 10.

So it is open for a tenant to re-commence rent relief negotiations despite locking themselves into a negotiated agreement previously, provided that their financial circumstance materially changes due to these further lockdown restrictions.  It is not clear what 'materially changes' means, however on face value it would appear that if the tenant is not able to comply with the terms of the altered rent arrangements due to the further lockdown, then the tenant can request further relief.

On receipt of that request, the landlord and tenant must follow the rent relief process set out in Regulation 10, however any rent relief provided by the landlord does not have to comprise at least 50% waiver. In all other respects, the same process applies to the further rent relief negotiations.

Importantly, Regulation 11 only applies where the landlord and tenant have reached agreement previously, so any ongoing negotiations would still need to comply with the minimum 50% waiver requirement set out in Regulation 10(4) (b).

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 the further Stage 3 lockdown measures, please contact a member of our Real Estate team.


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