The Victorian Government has today announced further details about the Commercial Tenancy Relief Scheme which they had previously announced on Wednesday 28 July and which was included in our earlier Update. A copy of the statement from the Premier with the further details is attached.
The legislation for the further rent relief scheme has been introduced into Parliament but has not yet become law. As a result, the new Regulations – which will set out the actual details of Scheme – have not yet been released.
But, based on the Premier’s statement and the Bill before parliament, the Scheme appears to have the following features.
Rent relief for eligible tenants will be calculated by comparing their turnover for the final quarter of the 2020/21 financial year with turnover from the final quarter of 2018/19 financial year. Tenants will be eligible for the Scheme if the drop in turnover is greater than 30 per cent.
The final quarter of the 2020/21 financial year (being 1 April 2021 until 30 June 2021) included Lockdown 4.0 (which commenced on 28 May) and the subsequent restricted trading period but does not include Lockdown 5.0 (which commenced on 16 July).
Whether a tenant is going to be able to show a drop in turnover of greater than 30% is going to depend on the location and type of venue, and how well the venue performed in April and May 2021 before lockdown 4.0.
A venue in Melbourne’s CBD may well be able to show the required drop in turnover when compared to the final quarter of 2018/2019 (which, of course, was pre-Covid).
But, a venue in the regional Victoria (where the Lockdown 4.0 restrictions were eased earlier) may not have suffered the required drop in turnover.
It is possible that any Government support payments received in relation to Lockdown 4.0 will be treated as part of the tenant’s turnover (as they were in relation to last year’s rent relief scheme).
Special arrangements will be in place to assess the turnover impacts for new businesses which were not operating in 2019.
Eligibility for the Scheme will be a one-time test and businesses that are eligible at the beginning of the Scheme will remain eligible throughout.
It is not yet clear how long the Scheme will run. But, the Premier’s statement says that existing deferred rent repayment requirements are to be frozen until 15 January 2022 – which suggests the Scheme will run until at least that date.
There will also be a mandatory reassessment of turnover further into the Scheme, with the proportion of rent relief adjusted in line with turnover It is not yet clear when that reassessment will occur.
For eligible tenants under the proposed Scheme, if there is an existing agreement in place from the first Commercial Tenancy Relief Scheme which included deferred rental payments, those deferred rent repayment requirements will be frozen until 15 January 2022. The outstanding amount will then be added to the deferred rent accrued during the current Scheme.
Support for Landlords
Landlords providing rent relief for eligible tenants will receive land tax relief of up to 25%, in addition to any previous relief.
Hardship payments will also be available to small landlords who can demonstrate acute hardship.
Once the new Regulations have been made, we will provide a further update.
This update does not constitute legal advice and should not be relied upon as such. It is intended only to provide a summary and general overview on matters of interest and it is not intended to be comprehensive. You should seek legal or other professional advice before acting or relying on any of the content.