Australia: Extension of rent relief measures for commercial tenants

In our Property Update released on 4 May 2020 we commented on the new Victorian Regulations which provided certain tenants of commercial premises with the right to negotiate rent relief measures with their landlords.

Eligible tenants were those with turnover of less than $50 million and who were participating in the Federal Government's JobKeeper scheme. Any offers by landlords were required to take into account the reduction in the tenant's turnover during the Covid pandemic. Rent relief was designed to take the form of waiver of rent as to 50% of the relief and rent deferral as to the remaining 50%.

However if no rent relief agreement was agreed upon between the landlord and tenant then the tenant was able to apply to VCAT for a binding determination regarding rent relief though VCAT was not obliged to award rent relief proportionate to the tenant's reduction in turnover.

Those Regulations were scheduled to expire on 29 September 2020. However late last month the Premier announced by press release that the rent relief scheme would be extended until the end of the year. In recent weeks legislation has been introduced into and passed by the Victorian Parliament enabling the issuing of further Regulations extending the scheme until the end of the year (or indeed up until 26 April 2021 if the Government considers it necessary).

The exact form of these new Regulations will be important as in his press release the Premier announced some modifications to the existing scheme. This includes empowering the Victorian Small Business Commissioner, and not just VCAT, to make binding determinations.

In addition, binding determinations will be required to provide rent relief proportionate to the tenant's reduction in turnover whereas under the existing scheme this is merely a relevant consideration and VCAT's powers are more discretionary. We will update you once the new Regulations are issued and keep you appraised of relevant developments.

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