Negotiating rent relief: scenario

PLEASE NOTE: the Victorian Government’s extended Commercial Tenancy Relief Scheme (the Scheme) ended on 15 March 2022.

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The following scenario shows a commercial tenant and landlord having negotiations and reaching an agreement after 15 March 2022.

Scenario: a restaurant in Melbourne’s CBD

Towards the end of January 2022, restaurant owner Martine had negotiated backdated rent relief with her landlord Ahmed under the extended Commercial Tenancy Relief Scheme (the Scheme) from 16 January 2022 to 15 March 2022. They agreed to 50 per cent rent relief. Half was waived and the other half was deferred for paying over 24 months, starting 16 March 2022.

Although trading restrictions had lifted, for Martine, business was struggling to return to what it was. The restaurant’s turnover was still down, falling well short of what she needed to pay her staff, supplier invoices, accumulated debts and other business expenses. The debts increased. Martine was struggling to pay her monthly and deferred rent but knew she wasn’t entitled to rent relief with the extended Scheme having ended on 15 March 2022.

Taking on board the Victorian Small Business Commission’s (VSBC) recommended process, she reviewed her finances and accessed free financial counselling by calling the Partners in Wellbeing helpline on 1300 375 330.

Martine spoke with Ahmed about her situation and what rent she could afford, and asked for further relief. Ahmed’s response was that he was no longer obliged to offer Martine relief. Martine and Ahmed stopped communicating.

Applying for help

Martine applied to the VSBC for impartial help to resolve the matter. The VSBC helped early on by getting in touch with Ahmed to try to re-start communication and facilitate a discussion. Martine and Ahmed started talking again about their position and concerns but couldn’t reach an agreement. Recognising what was needed, the VSBC progressed the matter to mediation, where an independent mediator helped them to negotiate a fair agreement.

Reaching an agreement

Through mediation, Ahmed and Martine agreed to a longer period for Martine to repay her deferred rent, helping her to pay her monthly rent going forward.

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