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Commercial Tenancy Relief Scheme

by | Aug 5, 2021 | Corporate & Business

The Victorian Government intends to introduce a new round of rent relief for some commercial tenants, as well as some support for complying landlords. This scheme is another chapter in the continuing Government support structures which commenced with the original Mandatory Code of Conduct introduced in March 2020 by the Federal Government and was implemented by the States (“First Relief Scheme”), and then extended.

The structure will be detailed in the Regulations, which are yet to be released and passed by Parliament.  The “enabling legislation” has been introduced so we are expecting to see the Regulations soon.

The Premier’s press release refers to the following notable features:

  • although the legislation isn’t through yet, the scheme will be backdated to operate from 28 July 2021;
  • the previous schemes required participation in Jobkeeper in order to qualify.  Given that stimulus measure has now dried up, this will no longer be a condition;
  • a 30% loss must be demonstrated between the June quarter 2021 compared to the June quarter 2019.  Presumably this is because a comparison with June 2020 would probably show a similar picture given that we have been experiencing lockdowns for well over a year now.  Given that Lockdown 5.0 didn’t take effect until July 2021, the damage caused by that latest mandated closure may not be relevant in determining the threshold eligibility or the initial relief calculation;
  • however, in the interests of fairness to all parties, there will be a mandatory reassessment of turnover further into the scheme and relief will be adjusted in line with turnover later in the scheme (presumably assuming the tenant demonstrates eligibility initially, which is a 1-time test);
  • there will be arrangements in place to provide relief for businesses that were not operating in 2019 – we don’t know what those are yet;
  • for tenants who qualify for this scheme who are already subject to an existing agreement under the First Relief Scheme, the deferred rent requirements under the First Relief Scheme are frozen until 15 January 2022;
  • there is also some potential relief for landlords, who are in some cases bearing a significant load for these business closures, namely:
  • land tax relief of up to 25%; and
  • a $20million hardship fund is to be established to help “small landlords”.

We will provide further updates when they are available.  Our team of commercial lawyers at Nevett Ford frequently act for landlords and tenants in negotiating and drafting lease and occupancy agreements.  Call us on 03 9614 7111 or email melbourne@nevettford.com.au to discuss your requirements.