Commercial Tenancy Relief Scheme

Commercial Tenancy Relief Scheme 2022

07 February 2022

Further to our previous alerts, the Commercial Tenancy Relief Scheme is now extended to cover the period from 16 January 2022 to 15 March 2022.

The new regulations Commercial Tenancy Relief Scheme Regulations 2022 (Vic) (Regulations), made under the Commercial Tenancy Relief Scheme Act 2021 (Vic), replace the Commercial Tenancy Relief Scheme Regulations 2021 (Vic), which were revoked on 16 January 2022. The Regulations, which were made on 1 February 2022, are taken to have started on 16 January 2022 and will end on 16 March 2022.

A tenant that was eligible under the previous Scheme does not automatically qualify for rent relief under these Regulations. A new rent relief request must be submitted under the Regulations if a tenant is deemed an Eligible Tenant (as defined below).

The Regulations:

  1. An Eligible Tenant can apply to their landlord for rent relief for the period between 16 January 2022 to 15 March 2022 (Protection Period) under the Regulations, if:
    1. its commercial (retail/non-retail) lease or licence was in effect on 16 January 2022;
    2. the tenant is a small entity, as at 16 January 2022, operating with an annual turnover of less than $10 million during the 2021 financial year (or, if having not traded for the full duration of the 2021 financial year, its turnover for the 2022 financial year is likely to be less than $10 million);
    3. the tenant is not an excluded tenant (involving agriculture or a listed corporation);
    4. the tenant has suffered a minimum 30% decline in turnover in the turnover test (see below).
      1. A tenant satisfies the turnover test if the turnover for the Turnover Test Period in January 2022 falls short of the tenant’s comparison turnover for the Comparison Period in January 2020 by 30% or more. If the tenant’s business was closed during January 2020 for more than a week, the comparison period will be December 2019. The turnover includes all the tenant’s turnover (including Victorian grants and support funds) but excludes any financial assistance paid wholly by the Commonwealth.
  2. An Eligible Tenant must submit its request for rent relief for the Protection Period to the landlord under the Regulations by 15 March 2022. Its request must include a statutory declaration from the Eligible Tenant stating that:
    1. the tenant is an Eligible Tenant under the Regulations; and
    2. the information provided in the tenant’s application for rent relief is true to the best of the tenant’s knowledge.
  3. The Eligible Tenant must provide evidence of its decline in turnover to support its request for rent relief within 14 days of applying to the landlord for relief. The Regulations sets out the types of evidence considered acceptable (which is consistent with the previous Scheme). If this is not provided within 14 days of the application, the tenant’s request lapses and must submit a new request. A tenant is no longer eligible for rent relief after three lapsed requests.
  4. Once all information above is provided, the landlord must offer the Eligible Tenant the following rent relief within 14 days:
    1. rent relief must, at a minimum, be proportional to the tenant’s decline in turnover (at least 50% of that rent relief needs to be waived); and
    2. if the tenant is already experiencing a deferred rent payment under a previous rent relief agreement, that deferred payment will be further deferred to 15 March 2022 in addition to any new deferred rent.
  5. Similar to the previous Scheme:
    1. the Eligible Tenant retains similar protection for non-payment of rent or outgoings, including a prohibition on evictions or the claiming of security; and
    2. the landlord of an Eligible Tenant cannot increase the rent payable under the lease and any right to increase the rent during this period is void.

If you would like to discuss the above Regulations and how they will affect you, please contact our Property or Commercial team for further information.

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