The Victorian Government will provide tenancy rules to give relief for commercial tenants struggling with rent payments, with new regulations finalised as part of the Commercial Tenancy Relief Scheme. The scheme will help small and medium-sized businesses with an annual turnover of less than $50 million that have experienced a loss in turnover of more than 30 per cent during the pandemic.
Eligibility for rent relief requires tenants to identify three consecutive months between 1 April and 30 September 2021 to compare to their turnover in the same three months in 2019. Businesses will get financial relief in the form of a proportionate reduction in rent. For example, a business with a turnover of 40 per cent of pre-pandemic levels can only be charged 40 per cent of its rent. Of the balance, at least half must be waived, with the remainder to be deferred.
As part of the scheme, the Victorian Small Business Commission will support tenants and landlords with information to negotiate an agreement and free mediation for those who need assistance. New businesses will also be protected under the scheme, with any business which has opened since April 2019 eligible for assistance. Details on assistance for new businesses can be found on the VSBC website.
The Scheme will apply retrospectively from 28 July 2021 and will run until 15 January 2022. To help landlords that are doing the right thing by eligible tenants, the Government will provide land tax relief of up to 25 per cent, in addition to any previous relief, with the support worth up to $100 million.
Small landlords who can demonstrate acute hardship will be eligible to apply for payments as part of a $20 million hardship fund.
The tenant must apply to the landlord for rent relief, and the application must include evidence of the tenant’s eligibility. The landlord must respond with an offer to the tenant within 14 days.
Landlord to make offer if request is compliant
Within 14 days of receiving the evidence required to be provided by the Tenant, the Landlord must make an offer of rent relief in writing which must:
- relate to up to 100% of the rent payable during the rent relief period;
- at a minimum be proportional to the tenant’s decline in turnover;
- provide that no less than 50% of the rent relief is in the form of a waiver (with the balance to be deferred);
- take into account part payments of rent by the Tenant throughout the rent relief period; and
- take into account the ‘other circumstances’.
The Landlord’s offer must relate to the ‘rent relief period’ determined as follows:
- if the Tenant makes its application (and provides evidence) on or before 30 September 2021, the rent relief period will be 28 July 2021 –15 January 2022;
- if the Tenant makes its application (and provides evidence) after 30 September 2021, the rent relief period will be from the date of the tenant’s request until 15 January 2022.
For assistance in determining your eligibility and support to submit an application, please contact your usual Mazars Advisor or alternatively, the author via the form below.
Author: Michael Jones
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