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Victorian Government announces new rent relief scheme

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By Evelyn Marcou, Senior Associate

The Victorian Government today announced a new/extended Commercial Tenancy Relief Scheme (“CTRS”) for small to medium sized tenants in Victoria.

It appears that the scheme will mirror the Regulations that were first put into place from late March 2020 under the COVID-19 Omnibus (Emergency Measures) Act 2020 (the “Act”). At this stage, there are more ‘unknowns‘ than ‘knowns‘, particularly given that the Act has ceased to grant powers to government to make such regulations and that the previous scheme was tied to Jobkeeper, which is no longer in operation.  New legislation will need to be passed and at this stage we do not have any specific details, other than the information given in the announcement.

At this stage, and based on the announcement, the following is known:

  • The scheme will be available to tenants with a turnover of less than $50M who  have shown a 30% downturn in trade due to the Coronavirus. We do not yet have details on how these thresholds will be defined and tested in the legislation. It was suggested in the press conference by the Minister for Small Business, Jaala Pulford, that the reference period for reduction in rent will be “pre-pandemic”. However, it is unclear how will this work for tenants who entered into leases during the pandemic.
  • The principles of proportionality will continue to apply. That is that landlords provide rent relief proportionate to the tenant’s downturn in trade compared to pre-pandemic levels, at least half of which is by way of waiver and the remainder deferred.
  • There will be a prohibition on evictions with effect from today and the CTRS will apply retrospectively.
  • Mediation will be available.
  • We assume the CTRS will be enacted by legislation to be passed by the Victorian Government. The next sitting of Parliament is on 3-5 August 2021.  We will need to wait to see if legislation is drafted in time for this session.

There will be an $80M hardship fund for landlords who provide rent relief. We do not have any details as to this fund yet.

There will be more to come as the new CTRS evolves.

In the meantime, if you have any queries in relation to the application of the new CTRS, please do not hesitate to contact Evelyn Marcou on evelyn.marcou@mst.com.au.