New Commercial Tenancy Relief Scheme for Victoria Small and Medium Businesses
On 28 July 2021, the Victorian Government announced that it is reintroducing the Commercial Tenancy Relief Scheme (New Scheme). The New Scheme aims to ease the pressure of the impact of the COVID-19 outbreaks and lockdowns for eligible tenants who have suffered a downturn in their business.
The Victorian Government also indicated that it will provide separate support to landlords who do the right thing by their tenants.
Overview of the New Scheme
We understand from the announcement that the New Scheme has the following features:
- The New Scheme is available to tenants:
- with an annual turnover of $50 million; and
- who has suffered a decline in turnover of at least 30% due to coronavirus.
- Landlords are required to provide proportional rent relief in line with the tenant’s reduction in turnover.
- Half of the proportional rent relief must be waived, with the remainder to be deferred.
- Tenants and landlords are encouraged to enter into negotiations directly.
- The Victorian Small Business Commissioner (VSBC) is available to provide mediation services if parties cannot reach an agreement.
- Landlords cannot lockout or evict tenants without a determination from the VSBC.
- The Victorian Government will create an $80 million hardship fund for landlords who provide rent relief to eligible tenants.
Preliminary Thoughts on the New Scheme
The previous Scheme relied on the Commonwealth’s JobKeeper Program to determine the tenant’s eligibility for rent relief. Since this program is no longer in operation, the Victorian Government might have to set either similar or different eligibility criteria for the New Scheme.
The decline in turnover under the previous Scheme was calculated by comparing the turnover between April 2020 and March 2021 with the previous turnover of the same period before the COVID-19 pandemic occurred. However, as we know, both the 2020 and 2021 financial years has been affected by the COVID-19 pandemic. It is unclear which period will be used to compare the current turnover and calculate the decline in turnover under the New Scheme.
The Victorian Government is yet to enact the legislation for the New Scheme, which will operate retrospectively from 28 July 2021. Further details of the New Scheme are not yet available until the Victorian Government introduces and legislates the New Scheme.
If you are a tenant or a landlord involved in a lease dispute, we can assist you in obtaining a satisfactory and commercial resolution. We are experts in dispute resolution and would be happy to provide you with specific advice on the best course of action available.
For further information, please do not hesitate to contact us.
Craig Higginbotham and Richen Mojica
30 July 2021