We are now over six months into the pandemic with restrictions eased in many states and parts of regional Victoria. However metropolitan Melbourne remains under stage 4 restrictions.
The first round of rent relief negotiations from April to July 2020 has passed but there are still a number of landlords and tenants in dispute over the period 1 July 2020 up to date.
The Victorian Government Covid rent relief regulations came into operation on 29 March 2020 to end on 29 September 2020.
Extended rent relief measures to restrict lease evictions and rent increases until the 31 December 2020 were announced in August with the possibility they may extend to commercial leases to the 26 April 2021.
The Retail Leases Amendment Bill 2019 (Vic) and the COVID-19 Commercial and Residential Tenancies Legislation Amendment (Extension) Bill 2020 have now been passed.
The rent relief will continue to apply to all eligible commercial leases:
- the tenant must qualify for, and participate in, the JobKeeper program
- the tenant has an annual turnover of up to $50 million
The changes include removing the requirement that tenants must have employees, and eligible sole traders, not-for-profits and franchisees participating in JobKeeper (as JobKeeper may vary in the future) will now become eligible. This will also resolve the issue where a tenant makes use of a service entity to employ staff.
The Bill will also:
- allow a tenant to seek binding orders directing landlords under eligible leases to give or agree to give specified rent relief.
- set out the rent relief process for a tenant who seeks binding orders including the content of the application and documents to support it
- allow the review and enforcement of binding orders by the Victorian Civil and Administrative Tribunal.
There appears to be no similar right for a landlord to seek binding orders against a tenant under the Bill and tenants must still make an application for rent relief following the process set out in the regulations and negotiate with the landlord in good faith.
The key take outs from the Second reading speech were as follows:
- it is expected landlords and tenants will continue to work together to reach agreement to best assist the ongoing survival of the business and if agreement cannot be reached to seek mediation by the Victorian Small Business Commission (VSBC).
- tenants must still ask for rent relief as prescribed in the regulations as rent relief is not automatic.
- the Government sought to make the application process for tenants as easy as possible and landlords should only request minimal supporting information that largely mirrors the information provided by the tenant for their JobKeeper application.
- compliance with the regulations is mandatory, and landlords have obligations to respond to requests for rent relief.
The regulations will also provide powers for the VSBC to make an order considered fair and reasonable in all the circumstances where a landlord has consistently failed to respond to VSBC pre-mediation requests to negotiate in good faith.
The regulations will also tighten the obligation on landlords to give rent relief in proportion to the tenant’s reduction in turnover which arose from data that shows that landlords were not negotiating in good faith in many instances.
This article has been updated to reflect the passing of the Acts.
