Commercial tenancy rent relief alert – Strict compliance and proportionality

By Ryan Attard, Law Clerk, and Alicia Hill, Principal, MST Lawyers

The ‘Commercial Tenancy Rent Relief Scheme’ (the Scheme) was extended to operate until 31 December 2020. Originally set to expire on 28 September, the extension includes various amendments. An overview is provided in our previous article on the subject.

We draw attention in this alert to 2 significant changes.

Strict Compliance

Tenants seeking rent relief for the period 29 September to 31 December 2020 must make a new written application to the landlord. This includes rent relief matters that have been referred to the VSBC for resolution but which have not yet been mediated.

The only exception to this is if the previous application includes all necessary information required under the extension.  

All tenants are required to provide the landlord with the following information to make the request:

  1. a statement confirming that your business is a small to medium enterprise with a turnover under $50 million;
  2. a statement that your lease is an eligible lease and is covered by the Scheme;
  3. evidence that you are taking part in the JobKeeper scheme;
  4. a statement of your decline in turnover associated with your premises only that includes at least one of the following:
    1. extracts from your accounting records; or
    2. your business activity statement/s that relate to the relevant turnover test period; or
    3. statements issued by an authorised deposit-taking institution that relates to your accounts; or
    4. a statement prepared by a practising accountant.

Tenants need to be quick in making their application as rent relief can only be granted from the date they make a compliant written application to their landlord which contains the information above.

For example, if a rent relief request is made on 2 October 2020 but then the information required to be provided is not furnished on the landlord until 1 November 2020, then strictly the landlord only needs to grant relief for the period of 1 November 2020 to 31 December 2020.

It is crucial that a compliant rent relief request is made as soon as possible. If a mater does not resolve by agreement or at mediation and an application is made to VCAT then strict compliance would mean that relief could be lost for any dates after 29 September and before the application is made.

Proportionality

Landlords must now offer proportional rent for any eligible tenants.

This is based on the tenant’s downturn in turnover. For example, if the tenant has a 40% downturn, then the rent required to be paid is reduced by 40%. The unpaid amount is 50% waived and 50% deferred.

The prior ability to consider the landlord’s financial ability has been removed.

Landlords however may be eligible for compensation from the Victorian Government in the form of a $3,000 grant should they grant rent relief.

 

If you see any assistance in seeking rent relief under the extended scheme or to further understand your eligibility, please contact our office at (03) 8540 0200 or email Alicia Hill at Alicia.hill@mst.com.au or Evelyn Marcou at evelyn.marcou@mst.com.au.