Process for commercial tenants and landlords

The following steps outline the process for landlords and tenants under the Victorian Government’s Commercial Tenancy Relief Scheme (the Scheme), which has been further extended until 28 March 2021.  

Tenant questions

Who is eligible?

Eligible tenants are small to medium enterprises (SMEs) with an annual aggregate turnover under $50m who qualify for and take part in the Commonwealth Government’s JobKeeper scheme.

If I can’t afford to pay my rent, what should I do?

Step 1

  • Keep paying what rent you can afford.
  • Apply for rent relief (including new and further requests for rent relief and any request for relief relating to outgoings) to your landlord in writing as soon as possible. A landlord only needs to offer rent relief in proportion to your fall in turnover from the date you apply in writing until 28 March 2021. Your request must be accompanied by:
    • a statement confirming that your business is a small to medium enterprise with a turnover under $50m
    • a statement that your lease is an eligible lease and is covered by the Commercial Tenancy Relief Scheme
    • evidence that you are taking part in the JobKeeper scheme (that you are entitled to a JobKeeper payment under the JobKeeper Rules) in the form of 1. your Business Registration for JobKeeper Wage Subsidy ATO receipt number issued by the ATO (you can request this from the ATO’s call centre) and 2. a copy of your most recent notice to the ATO under the JobKeeper Rules – you can access examples of the information that can be provided, depending on the number of employees, and the ATO receipt that tenants receive after submitting that information here (please note: you should delete private details including tax file numbers and employee names before providing this information to your landlord)
    • a statement of your decline in turnover associated with your premises only (expressed as a whole percentage and calculated using the actual decline in turnover test – see question 36 in the responses to frequently asked questions for the Scheme) that includes at least one of the following:
  • You can use the Victorian Small Business Commission’s (VSBC) letter template to guide you in requesting rent relief.

To learn more about the documents that need to accompany your request, read the VSBC’s responses to frequently asked questions.

Step 2

  • After you make a written request, your landlord must offer rent relief within 14 days, unless a different time frame has been agreed to by you and your landlord in writing.
  • Unless you and your landlord otherwise agree in writing, no less than 50 per cent of the rent relief offered by your landlord should be in the form of a rent waiver.
  • The rent relief must, at a minimum, be in proportion to the decline in the turnover associated with the premises.
  • The offer must apply from the date you applied to your landlord in writing until 28 March 2021.
  • When offering you rent relief, your landlord is required to take into account:
    • any waiver or reduction of outgoings they have already provided to you
    • any waiver or reduction of outgoings or other expenses for the premises provided by other parties (e.g. water company or council)
    • whether your capacity to pay rent under the lease would be compromised by not being offered sufficient relief.

Step 3

  • If agreement is reached, make sure it is in writing.
  • You can choose to do this as a variation of the lease, but this is not necessary if you have a written agreement for rent relief.

What if I can’t reach agreement?

Step 4

Apply for free mediation with the VSBC to resolve your rent dispute, making sure you include:

  • all evidence provided to your landlord including your written request for rent relief and
  • all relevant correspondence and other materials between you and your landlord following your request for rent relief and
  • the contact details of your landlord including their postal address and phone number and
  • a copy of your lease and evidence that your business is taking part in the JobKeeper scheme.

What happens at the VSBC?

Step 5

  • A case officer will contact you and your landlord to try to resolve the rent dispute and, if needed, arrange a free mediation session. This session will be conducted by an experienced, independent mediator via video or telephone.
  • The VSBC will forward your application to your landlord with a dispute notice letter and form of response.

What if my landlord refuses to negotiate through the VSBC?

Step 6

  • If you reach an agreement with the landlord during the mediation session, you are both able to enter into binding Terms of Settlement.

Step 7

  • If an agreement cannot be reached or the Terms of Settlement are breached, either party can apply to VCAT or a court for a decision on their dispute.

Tenant resources: letter for requesting rent relief and further leasing advice

Tenants can use the VSBC’s letter template as a guide for requesting rent relief from their landlord, and access further leasing advice and a rent relief scenario.

Landlord questions

What should I do if my tenant has stopped paying rent and won’t respond to my request to negotiate rent relief?

  • You can apply for free mediation with the VSBC to resolve your rent dispute, making sure you include a copy of your tenant’s lease.
  • A case officer from the VSBC will contact you and your tenant to try to resolve the rent dispute and, if needed arrange a free mediation session. This session will be conducted by an experienced, independent mediator via video or telephone.

What if my tenant refuses to negotiate through the VSBC?

  • If your tenant refuses to mediate through the VSBC, the Victorian Small Business Commissioner may issue a certificate noting this refusal so that you can pursue this matter at the VCAT.

What should I do if my tenant has written requesting rent relief under the Commercial Tenancy Relief Scheme?

Step 1

  • If your tenant is eligible, you need to respond in writing to their request within 14 days, or within a time frame otherwise agreed by you and your tenant. If your tenant is not eligible, you and your tenant are encouraged to follow the same process to agree on rent relief.

Step 2

  • Unless you and your tenant otherwise agree in writing, no less than 50 per cent of the rent relief you offer should be in the form of a waiver.
  • The rent relief must, at a minimum, be in proportion to the decline in the turnover associated with the premises.
  • The offer must apply to the period from the date your tenant applied for rent relief to you in writing until 28 March 2021.
  • You are required to take the following into account when offering rent relief:
    • any waiver or reduction of outgoings you have already provided to your tenant
    • any waiver or reduction of outgoings or other expenses for the premises provided by other parties to you (e.g. water company or council)
    • whether your tenant’s capacity to pay rent under the lease would be compromised by not being offered sufficient relief.

Step 3

  • Following your offer of rent relief to your tenant, you are both required to negotiate in good faith to reach a mutually satisfactory agreement.
  • If agreement is reached, document what has been agreed in writing.
  • You can choose to document this agreement as a variation of the lease but this is not necessary, as long as the written agreement gives effect to the rent relief.

What if I can’t reach agreement?

Step 4

For more information, read the VSBC’s responses to frequently asked questions.

If I have a mortgage, should I contact my bank?

Step 5

  • Landlords who provide rent relief to their tenants should ask their lender about mortgage payment deferral. Evidence of mortgage payment deferral may be needed at mediation.

Am I entitled to a land tax reduction?

Step 6

  • Landlords who have provided rent relief to an eligible tenant can apply to the State Revenue Office for a land tax discount.
  • For more information or to apply, visit the State Revenue Office’s website.

Landlord resource: further leasing advice

Landlords can access further leasing advice, including responses to key questions and a scenario showing what rent relief negotiations can look like.

 

Related information