Victoria’s COVID-19 Commercial Tenancy Relief Scheme to be extended to 28 March 2021
In April 2020, the Victorian Government introduced new regulations designed to provide rent relief (often referred to as ‘coronavirus rent relief’) and other protections for eligible commercial tenants. The government has once again extended the relevant period under the Commercial Tenancy Relief Scheme (CTRS) from 31 December 2021 until 28 March 2021.
This scheme works alongside the Federal Government's mandatory commercial tenancy code of conduct which outlines good faith principles for commercial tenancies related to retail, office and industrial space.
This means tenants of eligible leases may now be able to seek further rent relief from their landlords until 28 March 2021 and freezes on rent increases and bans on evictions for those tenants that have requested rent relief may continue until that date. This is in accordance with the recently released COVID-19 Omnibus (Emergency Measures) (Commercial Leases and Licences) Amendment Regulations 2020.
Caution – requests for rent relief do not operate retrospectively
A request for rent relief for the period ending 28 March 2021 only gives the tenant an entitlement to rent relief from the date of the request – it does not operate retrospectively. For example, if the tenant makes a request on 15 January 2021, the tenant is only entitled to rent relief from 15 January to 28 March 2021, not from 1 January 2021. This is a good reason for tenants to make their request for rent relief as early as possible.
Some commentators have suggested that there is an argument that a request for rent relief made on or before 31 December 2020, allows a tenant to seek rent relief based on its figures from the last completed quarter (i.e. the quarter ending September 2020). For many tenants, those figures will show a greater downturn than trade figures over the quarter ending December 2020. However, the argument is not available if tenants make the request on or after 1 January 2021 and a request made on or after 1 January 2021 would be based on December quarter figures.
Eligibility criteria
There have been no further changes to:
- the eligibility criteria for relief;
- the formula for determining a tenant’s minimum entitlement to relief; or
- the requirements imposed on tenants when requesting relief from landlords.
Relief for eligible tenants must still be, at a minimum, proportionate to the tenant’s decline in turnover from the premises and the requirements for requesting relief (as previously amended on 29 September 2020) apply. The extension is good news for qualifying tenants but perhaps not so much for landlords who may have been hoping 2021 would see the end of the requirement to grant any further relief and the beginning of payments of deferred rent.
Document your agreement
Any agreement reached should be properly documented and you should ensure it complies with the legislation and achieves the desired commercial outcome. Financiers and proposed assignees of the freehold or leasehold interest in the premises will no doubt be carefully scrutinising any such agreement.
Get legal advice
As always, landlords and tenants should obtain expert legal advice on their rights and obligations under the ever-changing legislation. Seeking advice early, and before you finalise any agreement in writing, will certainly protect your business. For assistance in relation to the CTRS, please get in touch with us.
