Rent Relief Rebate Amendments To Scheme Announced By Victorian Government

Commercial tenants have been some of the hardest hit during the ongoing COVID-19 situation, with many losing out on revenue while businesses have been forced to close or make alternative arrangements across the state/country. With losses in revenue and mounting costs facing many businesses and their owners, it’s not surprising that many have been asking the state government for assistance to keep from having to close their doors forever.

On 25 August 2021, the Victorian government finalised new regulations and broadened the eligibility requirements for the Commercial Tenancy Relief Scheme (known also as “the Scheme”).

Essentially, these amendments have been brought in to assist small and medium-sized businesses with some welcome rent relief, a major concern for many businesses within hotspot areas who cannot continue operations in the usual manner during the COVID-19 situation. This rent relief will be in the form of a proportionate reduction in rent, determined by the decrease in turnover/revenue.

If, for example, your business has a turnover that was congruent with 35% of what it had in pre-pandemic levels, then it can only be charged 35% of the rent, with half of the balance waived and the remainder deferred.

The Scheme is hoped to help the small and medium-sized businesses with an annual turnover of less than $50 million who have experienced a decrease of more than 30% during the pandemic of their revenue. New businesses will also be eligible for assistance under the Scheme if they have been opened since April 2019. Special arrangements will be in place to calculate the turnover impacts for businesses that were not operating in 2019.

The eligibility for rent relief has also been broadened under the amendments. Commercial tenants will now be able to choose three consecutive months between 1 April and 30 September to compare to their turnover in the same three months in 2019, to assist in determining the financial relief amount.

In accordance with the Scheme, the Victorian Small Business Commission will support tenants and landlords with the provision of information to assist in negotiating a rent relief agreement. They will also provide access to free and impartial mediation if a fair agreement cannot be brokered, and are also offering help with negotiations and mediation in the event that a tenant isn’t eligible.

Under the Scheme, landlords and tenants will require a mandatory reassessment point during the period of rent relief to check in on one another, and assess whether the circumstances have changed and rent relief should be adjusted accordingly.

Previously, the Scheme mandated that there was to be a freeze on rent increases until 15 January 2022. Evictions for not paying rent are to be banned until the same date (unless a directive from the Victorian Small Businesses Commission is obtained), where the tenant:

  • is an SME
  • has an annual aggregate turnover under $50m (at group level)
  • had a minimum 30 per cent reduction in turnover because of COVID-19, and
  • has followed the process under the Scheme in requesting rent relief from their landlord.

This is still currently in effect.

Commercial tenants are not the only beneficiaries of the rent relief amendments, however. Landlords who provide their eligible tenants with rent relief will be provided by the Government with tax relief of up to 25 per cent (in addition to any previous relief), with the support worth up to $100 million.

Additionally, any small landlord who can demonstrate acute hardship will be eligible to apply for payments as a part of a $20 million hardship fund.

The Scheme will apply retrospectively from 28 July 2021 through to 15 January 2022.

In light of the new rental relief amendments to the Scheme, commercial landlords and tenants should enter into a negotiation with regard to their current commercial leases. Seeking additional advice from legal professionals or the VSBC regarding these negotiations is highly encouraged.

If you are a business that has been facing the impacts of COVID-19 and are looking for help in determining what assistance is available to you, you can speak with us about determining your eligibility for the Scheme, business planning and more. We’re here to assist you.

The team at TAS
(03) 9728 1448