Update on COVID-19 Victorian Rent Relief.

UPDATE: Rent Relief has been extended by the Victorian Government until 15 March 2022.

We will provide further details once the new regulations are published.

Here is a brief press release statement from the minister:

The extended scheme will be available to businesses with an annual turnover of $10 million or less and which have suffered a decline in turnover of at least 30 per cent due to COVID-19.

Landlords will be required to provide continued proportional rent relief in line with a reduction in turnover. For example, a business with a turnover of 40 per cent of pre-pandemic levels could only be charged 40 per cent of its rent.

Of the balance, at least half would be waived, with the remainder to be deferred. The freeze on rent increases will continue.”

The full text of the Minister’s press release is available here: https://www.premier.vic.gov.au/commercial-tenancy-support-extended

The new regulations will take effect retrospectively from 16 January 2022 and appear to particularly affect small and family businesses (i.e. businesses with an annual turnover of $10 million or less).

As a result of the extension, eligible tenants will have more time for repayment of deferred rent in accordance with their existing rent relief agreement and landlords must continue to provide rent relief that matches the tenant’s fall in turnover.

Overview of Rent Relief available to tenants as at 13 October 2021.

Rent relief is still available for tenants under the Commercial Tenancy Relief Scheme Regulations 2021 (new Regulations). Tenants should also be aware that they can seek a mandatory reassessment of the rent relief that they have already agreed to.

The prior period closed on the 30^th of September, however tenants that are experiencing a decline in turnover can still apply up until the 15^th of January 2022.

Some tenants that were not eligible due to receiving grants last quarter may now be eligible.

Rent relief provisions will continue until 15^th of January 2022.

If you are an eligible tenant, have an eligible lease and pass for the “decline in turnover test” (decline of 30% or more) you should seek to apply for rent relief from your landlord.

Read the eligibility criteria and application criteria in our article here.

The underlying principles of good faith and a general obligation for the landlord and tenant to cooperate and act reasonably in all discussions continue to apply in the new Regulations.

In this round of rent relief, it is important for tenants and landlords to understand that there are specific dates and information required to be provided. The information is specific and tenants will need to ensure that their application is correct.

It is important to get advice on your application to ensure you comply as the rules will be applied strictly.

Mandatory Reassessment of Rent Relief

Tenants can apply for their rent relief agreement to be reassessed. This is important for tenants where there is a further subsequent decline in turnover. This will ensure that less rent is deferred and less of a financial burden to repay once business starts again.

Anyone considering a reassessment should ensure that the application is correct and submit a compliant request to the landlord before 31 October 2021.The new rules are strict and applications must be compliant.

Disputes arising from Rent Relief Applications

Some tenants are experiencing difficulties with landlords not approving their application for rent relief.

In disputes the regulations provide that the Victorian Small Business Commissioner (VSBC) will provide mediation services. Tenants and landlords must be aware of the risks of attending mediation unprepared or unrepresented.

Smaller tenants and landlords should seek advice prior to mediation. Our leasing lawyers have assisted them in preparing their case, presentation and advice on their legal rights. This helps those self- representing to ensure they can negotiate the best outcome.

Where you have a more complex matter or require legal representation, we can attend mediation with you.

It can be a long wait to get a mediation date with the VSBC. We can assist here and help negotiate the issue prior to mediation. Private commercial negotiations can easily settle lease disputes as both parties usually obtain legal advice and can quickly determine their rights and obligations. This in turn usually resolves things quickly as the parties clearly understand their legal position.

It is important that in any of the negotiations that the terms of repayment and amounts of rent abatement and rent deferral are clearly defined. Legal advice will help to ensure that you get what you are entitled to.

Other Lease Considerations to negotiate

Tenants are also looking as a part of the their rent relief negotiation to renegotiate other terms of their lease. This may be reduced rent, rent abatement or reduced repayments of rent deferrals or other terms.

What the law provides is the minimum and with expert representation you may be able to get more favourable terms.

It may be a good opportunity to try to renegotiate other lease terms that can help your business survive the impacts of lockdowns.

For many tenants the additional fees of due from rent deferrals may be difficult to commitments to make. Tenants should consider their position and try and assess how the repayment of rent deferrals will impact them next year.

When mediation fails – what options do I have?

If mediation at the VSBC fails you can take the matter to VCAT or try and settle the matter privately. If a tenant or landlord fails to attend mediation or mediation is unsuccessful then the VSBC will provide a certificate that mediation has failed or is unlikely to resolve the dispute.

You can only apply to VCAT once you have this certificate of mediation.

It is important when dealing with courts and tribunals that the material and claims are clearly drafted. Court Processes are strict and simple errors can be cost you financially or in lost time.

Our leasing lawyers can provide clear advice on your legal rights, carefully draft material for your case and present your case in the best possible light. We are skilled negotiators and have extensive experience in resolving lease disputes.

To discuss your matter with a leasing lawyer call us on 1300 907 335 or complete an online enquiry form and we will call you back promptly.

About The Author - Marilyn Wai

Marilyn Wai is a Senior Associate in the Commercial and Commercial Property Department. Marilyn studied law at Monash University and obtained a Bachelor of Laws and was admitted into practice in...