Rent relief….continued

Extension and amendments of the Covid-19 Emergency measures for Victorian commercial tenants until 31 December 2020.

The COVID-19 Omnibus (Emergency Measures) (Commercial Leases and Licences) Miscellaneous Amendments Regulations 2020 (the ‘Amending Regulations’) extend the operation of the Regulations from its previous end date of 29 September 2020 to 31 December 2020.

See the Amending Regulations at: https://www.legislation.vic.gov.au/as-made/statutory-rules/covid-19-omnibus-emergency-measures-commercial-leases-and-licences-0

More than a simple extension of the Regulations applicable during the period 29 March 2020 to 29 September 2020 (‘Initial Regulations’), the Amending Regulations create a new scheme for the period 30 September 2020 to 31 December 2020.

What are the main differences between the Initial Regulations and the Amending Regulations?

Eligible tenant

Under the Amending Regulations, sole traders can now be considered an eligible tenant and apply for rent relief.

Date of the application

An application for rent relief under the Amending Regulations will only apply from the date of the request. This means that a tenant who wants to request rent relief for the period 29 September until 31 December 2020, should do it as soon as possible.

Documents to be included by a tenant in the new rent relief application

The application will only be valid if it includes all the necessary information required by the extended Scheme:

• a statement confirming that the tenant’s business is a small to medium enterprise with a turnover under $50m;
• a statement that the lease is an eligible lease and is covered by the Commercial Tenancy Relief Scheme, and
• evidence that the Tenant are taking part in the JobKeeper scheme; and
• a statement of the tenant’s decline in turnover associated with the premises only (expressed as a whole percentage and calculated using the actual decline in turnover test) that includes at least one of the following:

• extracts from the tenant’s accounting records; or

• business activity statement(s) that relate to the relevant turnover test period; or

• statements issued by an authorised deposit-taking institution (e.g. a bank) that relate to the tenant’s account; or

• a statement prepared by a practising accountant.

What relief can be granted?

Under Regulation 8(3)(b), Landlords will be required to provide rent relief in proportion to the fall in turnover being experienced by eligible tenants from the time of receipt of a valid application for rent relief. This proportionality was only suggested in the previous Regulations and is now an obligation for the Landlord.

For example, in case of a downturn of 60%, the Landlord has now the obligation to offer rent relief of 60%. As previously required, at least half of the rent relief will need to be offered as a waiver.

Under Section 8(4) of the Amending Regulations, any rent relief applies to gross rent and a landlord is not permitted to reduce any part of the gross rent attributable to outgoings before offering relief.

Deferred period

The deferral period will start after 31 December 2020 for a period of a minimum of 24 months.

The role of the Small Business Commission

Under Section 11 of the Amending Regulations, tenants can now apply to the Small Business Commission for a binding order for rent relief if their landlord fails to respond or does not engage in mediation in good faith. This is new power for the Small Business Commission.

Mediations remain free

The Small Business Commission will keep offering free mediation to tenants and landlords who cannot reach an agreement.