The Victorian Government has now announced details of the new Covid19 Commercial Tenancy Relief Scheme
If you are a commercial tenant (or landlord) here are the key points for you to be aware of:-
Eligibility
- Rent relief is only available to tenants that are small and medium businesses with an annual turnover of less than $50 million and which have experienced a decline in turnover of 30% or more.
- To satisfy the decline in turnover test, tenants will need to compare their turnover for a consecutive 3-month period between 1 April 2021 and 30 September 2021 with the corresponding comparison period in 2019.
- Alternative tests are available to entities where there is not an appropriate comparison period in 2019 (eg. business was established or purchased from third party after 2019).
How does the rent relief work?
- An eligible tenant will get financial relief in the form of a proportionate reduction in rent.
- For example, a business with a turnover that is 40 per cent of pre-pandemic levels can only be charged 40 per cent of its rent. Of the balance (60% of the rent), at least half must be waived (ie. is never payable), with the remainder to be deferred (ie paid back over a period of time).
- Outgoings remain payable by the tenant
How do tenants apply for rent relief?
- Eligible tenants must make a written request to their landlord for relief, which must be accompanied by a statement that they are an eligible tenant and satisfy the decline in turnover test.
- The tenant must also provide a statutory declaration confirming that they are an eligible tenant and that the information provided is true to the best of their knowledge.
- The statutory declaration must be accompanied by at least one of the following to evidence their decline in turnover: (1) accounting records, (2) Business Activity Statements, (3) bank statements, or (4) a statement prepared by a practising accountant.
- Applications (including the supporting evidence) that are made by cut off date of 30 September will be eligible for backdated relief to apply from 28 July 2021 to 15 January 2022.
- The rent relief period for applications made on or after 1 October 2021 will run from the date the application is made until 15 January 2022.
- If you are a tenant it is therefore important to get a rent relief application in by 30 September 2021
- There is a mandatory reassessment for rent relief requests made on or before 30 September 2021 and for tenants that began trading before 1 April 2021. Tenants completing a mandatory reassessment need to provide their evidence of turnover decline to their landlord by 31 October 2021. There may be a further assessment of rent relief as a result of the turnover data revealed at the mandatory reassessment.
Other protections for tenants under the scheme
- Eligible tenants cannot be evicted without the landlord obtaining a direction from the Small Business Commissioner. An eligible tenant will be given protection from eviction if :-
- They have made a valid request for rent relief and continue to pay rent in proportion to their decline in turnover; or
- A rent relief agreement has been reached with the landlord
- A restriction on rent increases will remain in place until 15 January 2022 regardless of whether or not the tenant has requested rent relief. Further, if an eligible lease called for a review of rent during the protection period that would result in an increase in rent, the review is deemed void.
How we can help
We can give you advice and assistance in this matter.
If you are a tenant we can assist you with the necessary request of your landlord for the rent relief and prepare the necessary statutory declaration.
Please contact Grant Renkema on 9548 5500 if you would like assistance in these matters.
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