Victorian Commercial Tenancy Relief Scheme – It’s Back


Posted By on 3/08/21 at 1:54 PM

KHQ Lawyers - Commercial Tenancy Relief Scheme

Following the Victorian Government’s announcement on 28 July to re-establish the Commercial Tenancy Relief Scheme, the Bill to give effect to the re-established Scheme was introduced into Parliament today.

The legislation will enable the Government to make regulations in relation to eligible leases to give effect to various aspects of the Scheme. We understand the Property Council of Australia has been advised that the regulations will be published in about 2 weeks.

The regulations are expected to have retrospective effect to a day not earlier than 28 July 2021 and will continue in force until 30 October 2022.

The regulations may do any of the following in relation to an eligible lease:

  • Prohibit termination of a lease;
  • Change the timeframe under a lease for doing something;
  • Change or limit a landlord’s rights under a lease;
  • Exempt a landlord or tenant from complying with a lease;
  • Extend the period of a lease;
  • Imply terms introduced by the regulations into the lease;
  • Impose new obligations on landlords or tenants;
  • Require landlords and tenants in dispute to participate in mediation arranged by the Small Business Commission and to have a mediation certificate before commencing proceedings in VCAT or a court;
  • Make orders directing landlords to give specified rent relief to tenants;
  • Set out process for tenants to apply for rent relief, including preconditions to a rent relief application and criteria to be applied in deciding rent relief applications.

The Small Business Commission has powers to facilitate the mediation of disputes between landlord and tenants under an eligible lease, to monitor compliance with the regulations and commence proceedings for offences against the regulations.

The Victorian Government’s press release today provides further details on what can be expected from the Scheme:

  • Rent relief will be calculated by comparing the tenant’s turnover for the final quarter of the FY 2020/21 (ie April to June 2021) with turnover from the final quarter of 2018/19 (ie April to June 2019). Special arrangements will be put in place to assess turnover impacts of new businesses not operating in 2019.
  • Eligibility will require a decline in turnover of more than 30%.
  • Eligibility will be conducted once – meaning businesses eligible at the start of the Scheme will remain eligible throughout. However, there will be a mandatory reassessment of turnover during the period of the Scheme and rent relief can be adjusted in line with turnover.
  • Rent payments which have been deferred under the 2020 regulations will be frozen until 15 January 2022, when the outstanding amount will be added to the deferred rent applicable under the new Scheme.
  • Land tax relief of up to 25% will be provided to eligible landlords, although the hardship fund for small landlords is now anticipated to be $20 million (previously anticipated to be $80 million).
  • Landlords cannot evict eligible tenants without a direction from the VSBC.

The Government announcement last week indicated that rent relief will be proportional to turnover decline, with half of the rent relief to be provided as a permanent waiver and the other half to be deferred.

Today’s press release also encourages tenants and landlords to enter negotiations as soon as possible.

If you have any questions in relation to the Commercial Tenancy Relief Scheme, please contact our Commercial Property & Development team.

KHQ Lawyers - Dinh Ptok

Dinh Ptok Principal Solicitor

Dinh leads our Commercial Property & Development team. She has 19 years’ experience in commercial property law, including over 14 years at top tier firm, Herbert Smith Freehills. She has practised... Read More