Update: Further Rent relief announced for Victoria

The Victorian Government has today reintroduced a Commercial Tenancy Relief Scheme for eligible businesses. The Statement from the Victorian Premier announcing the Scheme is attached. Unfortunately the details that we know to date are scarce and we are expecting further detail to be released from the Government and to be included in the proposed legislation.

While the scheme is framed as a ‘reintroduction’, there will clearly be differences to the previous scheme. The previous scheme was tied to JobKeeper which is obviously not now in place but we are yet to be advised of what other documentation a tenant will need to provide to establish their eligibility.

We have the following broad details thus far:

  1. To be eligible for rent relief under the Scheme, businesses must have an annual turnover of less than $50 million and must have suffered a decline in turnover of at least 30 per cent due to COVID-19.
  2. The Victorian Government will also create a hardship fund in the amount of $80 million for landlords who provide rent relief to eligible tenants. Further details of that support will be confirmed in due course.
  3. The Scheme requires landlords to provide proportional rent relief to eligible businesses in line with a business’s reduction in turnover. Of the rent relief provided, at least half must be waived, with the remainder to be deferred. This is similar to how the rent relief was initially calculated and applied for the period from April 2020 until September 2020 and will presumably be based on pre-pandemic turnover levels.
  4. Tenants and landlords are encouraged to negotiate directly. The Victorian Small Business Commission (VSBC) is available to provide mediation if parties cannot reach a satisfactory agreement. Again the emphasis is on “good faith negotiations”.
  5. There will be a further moratorium on evictions without a VSBC determination.

Just some of the many matters that remain unclear are:

  • The period for the decline of turnover, and what the comparable period is – clearly, comparison to 2020 when the State was still in lockdown could present issues. In the previous scheme, the turnover periods were defined by reference to JobKeeper legislation.
  • It is not clear whether the turnover threshold will be calculated based on ‘grouping’ of tenants.
  • It is unclear whether the scheme will further defer the payment of deferred rent from 2020 (i.e. whether the scheme will put a ‘stay’ on repayments of current deferred rent), and whether the period for repayment of deferred rent will be extended.
  • It is unclear whether the moratorium will also prohibit rent increases.

The Scheme does not appear to cover the May or June lockdown periods. At this stage the press release says the Scheme will be applied retrospectively from today. If this is correct the Scheme will also exclude the most recent lockdown and will only apply for the current period of restricted trading and any future lockdowns. This seems to be a pretty unfavourable outcome for tenants and the losses they may have incurred over recent months.

Legislation will shortly be introduced to enact the Scheme – the most likely parliamentary session is from the 17th August 2021, but the Scheme will be applied retrospectively from today. The intention is to run the scheme until January 2022. Whilst it may be likely that the new Scheme will mirror the Rent Relief Regulations that applied in 2020 and early 2021 we will need to review the legislation in order to provide further detail.

As always our office will monitor changes in the situation, provide further updates, and address any queries you may have.

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.