On Wednesday, 28 July 2021, the Victorian government announced a $400 million package of new support measures for small and medium business in Victoria (to be funded jointly with the Commonwealth government) to assist them to recover from the recent COVID-19 lockdowns.
Included in the package are measures to provide rent relief to commercial tenants, and financial support to small landlords that provide rent relief to their tenants.
These measures will take effect from 28 July 2021.
Legislation will be required for some of these measures and more details will be announced soon.
Here’s a summary of the details from the announcement.
Commercial Tenancy Rent Relief
The commercial tenancy rent relief scheme (CTRS) enacted last year, and which ended on 28 March 2021, will be reinstated. The key elements of the revised scheme are expected to be:
- tenants will qualify for relief if they have turnover of less than $50 million per annum and have suffered a reduction in turnover from the relevant premises of at least 30% as a result of COVID-19;
- landlords will be required to offer qualifying tenants rent reductions in proportion to the tenant’s reduction in turnover. For example, a 40% reduction in turnover caused by COVID-19 would attract a 40% rent reduction;
- landlords will be required to waive at least half of the reduction amount, and the remainder will be deferred; and
- parties will be encouraged to agree on the rental relief and the Victorian Small Business Commissioner will provide a mediation service for parties that cannot reach agreement.
At this stage it is not clear what period the new relief will apply for, or whether it will “reach back” to cover the recent lockdown period.
The previous CTRS applied a moratorium preventing landlords from terminating leases or taking certain other actions as a result of defaults by tenants who qualify for relief under the scheme. Yesterday’s announcement did not mention such a moratorium but if all the main elements of the prior scheme are reinstated then it is likely a similar moratorium will apply for the duration of the reinstated scheme.
Commercial Landlord Hardship Fund
A fund of $80 million will be established to assist certain commercial landlords who have provided COVID-19 rent relief to their tenant(s) under the reinstated CTRS referred to above.
The details of the scheme are still to be announced, but it is anticipated the scheme will be similar to the previous hardship scheme for landlords which was managed by Business Victoria. The criteria for eligibility and payment limits under that previous scheme – summarised below –may provide some guidance on what to expect:
- the landlord must be a private individual or joint owner who is a natural person (i.e., not owned through a self managed superannuation fund or incorporated entity);
- the landlord must have total taxable landholdings worth less than $3 million (excluding one’s principal place of residence);
- the tenant must be eligible for the CTRS relief and the landlord must have provided the relief to its tenant; and
- the landlord has experience financial hardship from providing the rent relief.
Under the previous scheme the payment was up to $3,000 per tenancy.
If you need assistance to access rent relief or landlord hardship fund, please contact our Property Team.
~ with Alexandra Culshaw, Graduate at Law
