The Return of the Commercial Tenancy Relief Scheme for Victoria and what it means for businesses

4 August 2021

Publications

Update 1 September 2021: The Regulations have now been released. We provide a breakdown of the process and what you need to know here.

On 28 July 2021, the Victorian Government announced the reintroduction of the Commercial Tenancies Relief Scheme (2021 CTRS) and legislation was introduced into Parliament on 3 August 2021.

While the Regulations are still being drafted, this is what we know so far:

  • The 2021 CTRS will apply from 28 July 2021 and is intended to apply until mid-January 2022 to all small and medium sized businesses with an annual turnover of less than $50 million. Tenants and landlords are encouraged to enter negotiations as soon as possible.
  • Eligibility for the 2020 Commercial Tenancy Relief Scheme (2020 CTRS) was based on JobKeeper which is no longer in place. The 2021 CTRS instead requires evidence of a decline in turnover of at least 30% due to Covid-19 by comparing turnover from the final quarter of the 2020/21 financial year with turnover from the final quarter of 2018/19.
  • The data used to demonstrate this decline will come from the tenant rather than ATO data, however mandatory reassessment of turnover will occur further into the 2021 CTRS.
  • As was the case with the 2020 CTRS, the rent relief given by the landlord must be proportionate to the tenant’s decline in turnover.  Of that relief, at least half must be waived, and the other half deferred. Eligibility is a one-time test, ie businesses eligible at the beginning of the 2021 CTRS remain eligible throughout.
  • A landlord also cannot lock out or evict eligible tenants without a determination from the Victorian Small Businesses Commission (VSBC) during the 2021 CTRS period.  Again, the VSBC will act as a mediator between landlords and tenants where they cannot reach agreement.  If the mediation fails in the VSBC, the matter can then be referred to VCAT.
  • For those eligible tenants under the 2021 CTRS with an agreement in place under the 2020 CTRS, the existing deferred rent repayment requirements will be frozen until 15 January 2022. From this date, the outstanding amount will be added to the deferred rent from the 2021 CTRS.
  • To assist landlords providing relief, land tax relief of up to 25% is available and a $20 million hardship fund is being set up for those landlords who can demonstrate acute hardship.

The Small Business Commissioner has published a series of FAQs regarding the 2021 CTRS which can be accessed here.

If you have any questions about the 2021 CTRS or require property advice, please contact a member of our Victorian Property Team.

Contacts

Joseph Ip | Partner | +61 3 8080 3710 | jip@tglaw.com.au

Eu Ming Lim | Partner | +61 3 8080 3606 | elim@tglaw.com.au

Vicki Sharp | Partner | +61 3 9641 8668 | vsharp@tglaw.com.au 

Leong Chan | Special Counsel | +61 3 8080 3572 | lchan@tglaw.com.au 

Emma Martin | Special Counsel | +61 8080 3559 |emartin@tglaw.com.au