Commercial (including retail) tenants and landlords
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Commercial Tenancy Relief Scheme – reintroduced
To ease the pressure on Victoria’s small and medium-sized businesses at this time, the Victorian Government has reintroduced the Commercial Tenancy Relief Scheme (the Scheme).
The Scheme helps small and medium-sized businesses with an annual turnover of less than $50 million that have experienced a fall in turnover of more than 30 per cent during the coronavirus (COVID-19) pandemic. For more information about eligibility, see question 9 of our FAQs.
KEY REQUIREMENT: In order to get rent relief under the Scheme, eligible tenants must make a compliant request to their landlord in writing, providing the required evidence (see questions 12 and 13 of our FAQs).
Rent relief is in the form of a proportionate reduction in rent. For example, a business with a turnover of 40 per cent of pre-pandemic levels can only be charged 40 per cent of its rent. Of the balance, at least half must be waived, with the remainder deferred.
There is a freeze on rent increases and evictions for not paying rent, which are banned until 15 January 2022, where the tenant is eligible and has made a compliant rent relief request to their landlord.
Under the Scheme, the Victorian Small Business Commission (VSBC) is supporting tenants and landlords by providing information to assist with negotiating a rent relief agreement (see question 22 of our FAQs) and access to free and impartial mediation if a fair agreement can’t be reached.
KEY REQUIREMENT: Before a tenant applies for mediation under the Scheme, they:
- must have made a compliant rent relief request to their landlord, supplying the required evidence (see questions 12 and 13 of our FAQs)
- must attach their written request and evidence when applying for mediation.
Landlords can apply for mediation in situations where their tenant has stopped paying rent and an agreement can’t be reached.
Access our application forms here.
Tenants can also apply to us for a binding order for rent relief if a certificate has been issued by the VSBC stating that the landlord has failed to respond or sufficiently respond to us or hasn’t engaged in mediation in good faith.
The Scheme applies retrospectively from 28 July 2021 and will run until 15 January 2022. Rent relief can only be backdated to 28 July 2021 if the tenant sent their request and evidence by 30 September 2021. If sent after this date up until 15 January 2022, the landlord is only required to offer rent relief from the date they applied.
For more information about the Scheme’s key features, see question 2 of our FAQs.
What does the October 2021 mandatory reassessment involve?
A mandatory reassessment at 31 October 2021 enables both parties to check in and assess whether circumstances have changed and rent relief needs to be adjusted. If a tenant does not provide the required evidence to their landlord for the mandatory reassessment by 31 October 2021, the waiver component of their rent relief agreement will no longer apply from that date onwards. Read more here.
What supports are available to landlords?
The Victorian Government will provide land tax relief of up to 25 per cent to landlords waiving rent for their tenants, in addition to any previous 2021 land tax relief, at an estimated cost of $100 million. Businesses that own their premises may also be eligible. Eligible landlords will also be able to defer any remaining 2020 and 2021 land tax until 31 May 2022. More information will be made available on the State Revenue Office website.
Small landlords who experience hardship as a result of waiving rent between 28 July 2021 and 15 January 2022 under the Scheme will be eligible to apply for a grant of up to $6,000 per eligible tenancy as part of the Commercial Landlord Hardship Fund 3. In cases where landlords are experiencing acute hardship because of an agreed rent waiver, the grant may be increased to a maximum of $10,000 per eligible tenancy. FAQs and more information on eligibility and how to apply are available on the Business Victoria website.
What if a tenant isn’t eligible for the Scheme?
The landlord and tenant can use the Scheme to guide their negotiations, though the rent relief requirements cannot be mandated. It’s important for parties to negotiate in ‘good faith’, which is explained in question 22 of our FAQs.
We are offering help early on and free and impartial mediation to resolve disputes over rent relief in situations where the small business tenant is ineligible, including situations where a rent relief request was made before 28 July 2021.
Tenants and landlords are encouraged to access the following resources. If they have further queries, they can speak to us by calling 13 8722:
- The Victorian Government regulations for the Scheme
- Our step-by-step process for tenants and landlords
- Our FAQs on topics including how to calculate fall in turnover (see question 15) and how to access our optional letter templates for requesting rent relief (see questions 13) and making a rent relief offer (see question 20)
Can I end my lease early?
A lease is a legally binding agreement. Some tenants who are experiencing a downturn in trade might be wanting to end their lease early. We encourage tenants in this situation to communicate with their landlord as early as possible to discuss their position and alternative options. Find out more.
Looking after yourself
If you are feeling stressed, worried or overwhelmed, call the Partners in Wellbeing helpline on 1300 375 330 (9am – 10pm on weekdays, 9am – 5pm during weekends) for free mental health and financial counselling.
General retail leasing information – what tenants and landlords need to know
As a retail tenant or landlord, it’s important to understand:
- your rights and responsibilities and what is and isn’t allowed under the Retail Leases Act 2003 in relation to lease terms and conditions
- important changes under the Retail Leases Amendment Act 2020 that amended the Retail Leases Act 2003 in relation to essential safety measures, security deposits (bonds), disclosure statements, option to renew, early rent review and cooling off.