COVID-19 and the new Commercial Tenancy Relief Scheme

A global pandemic, an economy forced into hibernation, and repeated, extended, and somewhat unpredictable lockdowns…. With COVID-19 we have seen shifts in the lifestyles of Australians and challenges to our infrastructure and our economy that years ago, in lawyer speak, we might have called “far fetched and fanciful”.

The Commercial Tenancy Relief Scheme was seemingly at an end in March 2021, with no news of it being re-introduced, however with the pandemic and intermittent lockdowns continuing to blaze on, this week on 28 July 2021 the Victorian Government has announced a new/enlivened rent relief scheme for small to medium sized tenancies in Victoria.

In a Media Release dated 28 July 2021, Minister for Employment, the Hon Jaala Pulford stated:

“The Victorian Government is acting decisively to back the state’s small and medium-sized businesses as they emerge from lockdown, facilitating commercial rent waivers and deferrals from today. In a boost to thousands of businesses across the state, the reintroduced Commercial Tenancy Relief Scheme will ease pressure by providing rent relief for eligible tenants, while separate support will be provided to landlords who do the right thing by their tenants.”

The industry response from lawyers and agents alike is that at this juncture, there are more questions than there are answers, but we can confirm the Victorian Government has announced as follows:

• New legislation will be introduced, which will apply retrospectively, namely from 28 July 2021. Our understanding is that rent relief will be capable of being backdated to 28 July 2021, but the legislation will confirm this.

• The reintroduced Commercial Tenancy Relief Scheme will be available to tenants with a turnover of less than $50million where they are able to evidence a decline in turnover of at least 30% due to COVID-19. The Media Release refers to rent relief being offered in a manner that is proportionate to the tenant’s decline in turnover as compared to “pre-pandemic levels”, however it is unclear how the decline in turnover will be measured or verified in the legislation, particularly given that the previous Scheme was tied to the Federal JobKeeper Scheme, which is now at an end.

• At least half of the rent relief offered to eligible tenants is to be by way of waiver of rent, with the remainder deferred. It is unclear whether such deferrals of rent will be discretionary (as was previously the case), or mandatory.

• It remains to be seen whether the new legislation will provide more direction regarding the waiver or deferral of outgoings. The previous legislation required that landlords merely ‘consider’ such relief.

• Mediation will be available via the Victorian Small Business Commissioner (“VSBC”) This is welcome news in light of the written statement issued on 8 June 2021 to the effect that the VSBC no longer had any functions or powers in relation to the “old” Commercial Tenancy Relief Scheme following its expiration on 28 March. With the re-introduced Scheme it would appear the VSBC will have enlivened powers in relation to the new Scheme and rent relief disputes thereunder. However, it remains to be seen whether the VSBC will have any powers in relation to disputes under the “old” Commercial Tenancy Relief Scheme.

A substantial hardship fund is being set up for landlords who provide rent relief. The Premier of Victoria, the Hon Daniel Andrews, announced as follows on 28 July 2021:

“A new jointly funded package from the Commonwealth and Victorian Governments will give Victorian small and medium businesses the extra support and confidence they need to recover from the recent lockdown.

The new Victorian Business Support Package will deliver an additional $400 million in support to thousands of businesses, with funding to be split 50/50 between the Commonwealth and Victorian Government.

The package includes a new $85 million Small Business COVID Hardship Fund and $156 million Business Continuity Fund, as well as delivering support for commercial tenants and landlords.

It will also build on Victorian Government support for licenced hospitality and alpine venues, with $70 million for the Licensed Hospitality Venue Fund 2021 and $9.8 million for Alpine Business Support.”

We will provide a further update regarding the new Commercial Tenancy Relief Scheme and the new legislation once further information is to hand.

It would be prudent for commercial and retail landlords to tread carefully and reach out to us for tailored legal advice before taking action under a lease in relation to, for example, non-payment of rent, and any requests for rent relief, particularly given the new legislation has yet to be introduced.

View our past blogs on the CTRS:

COVID-19 and the New Changes to Leasing

Need extra time on your retail lease? This may help you 

COVID-19  – Commercial Tenancy Relief Scheme to be extended (again)

Amendments to the Commercial Tenancy Relief Scheme

COVID-19 Lease Variations – How to document it properly 

COVID-19 Lease Update – The Regulations are in. It’s time to negotiate in good faith 

Watch our past webinars on the CTRS:

TLFC Law Lunchtime Briefing: Post Commercial Tenancy Relief Scheme (CTRS) – What’s next? 

TLFC Law Lunchtime Briefing: Commercial and Retail Lease Update 

If you have any questions in relation to the reintroduced Commercial Tenancy Relief Scheme, if you need advice or assistance with rent relief, if you have a complicated variation to document, or if you otherwise are a landlord or tenant that would like more information or advice on the COVID-19 leasing changes or leasing generally, please contact Angela Kordos or a member of our Property Law Team