Covid 19 and Victorian Commercial Leases & Licences – What you need you know about Rent Relief Applications

With the impact of the Covid-19 pandemic commercial landlords and tenants in Victoria are faced with a changing landscape with collection and payment of rent.

On 1 May 2020 the Victorian Government enacted new regulations known as the COVID-19 Omnibus (Emergency Measures) (Commercial Leases and Licences) Regulations 2020 (See https://content.legislation.vic.gov.au/sites/default/files/2020-05/20-31sra001%20authorised.pdf).

These regulations allow for the implementation of the National Code of Leasing.

Of particular note they create the ability for an eligible tenant to seek temporary rent relief measures and they also introduce a compulsory mediation process if required by a landlord or a tenant.

Some of the major points from these new regulations are –

  • The objectives of the Regulations are to implement temporary measures to apply to tenants and landlords under certain eligible leases to mitigate the effect of measures taken in response to the COVID-19 pandemic and to implement mechanisms to resolve disputes concerning eligible leases.
  • The Regulations are taken to have come into operation on 29 March 2020 and they expire on 29 September 2020.
  • Any rent relief sought by a tenant from a landlord can therefore only apply for the period from 29 March 2020 to 29 September 2020.
  • A landlord and tenant under an eligible lease must co-operate and act reasonably and in good faith in all discussions and actions associated with matters to which the Regulations apply.
  • If you are a tenant you must be an eligible SME entity with a prescribed turnover under $50,000,000.00 and you must be participating in the JobKeeper Scheme; although farming and agricultural leases and licences are excluded. 
  • As an eligible tenant you must request rent relief from your landlord and provide it with a statement that you are an eligible SME entity participating in the JobKeeper scheme.
  • A landlord must offer rent relief to an eligible tenant within 14 days of receiving a request  or within such different time frame as agreed between the landlord and the tenant in writing.
  • A landlord under an eligible lease must not increase the rent payable under the lease at any time during the relevant period unless the landlord and the tenant agree in writing that it does not apply to their eligible lease.
  • If the payment of any rent is deferred by variation of an eligible lease, the landlord must offer the tenant an extension to the term of their eligible lease on the same terms and conditions that applied under the eligible lease before the commencement of the Regulations.
  • A landlord must consider waiving recovery of outgoings payable under an eligible lease for any part of the relevant period that the tenant is not able to operate their business at the premises.
  • Any reduced outgoing (such as land tax relief) must be passed on to tenant proportionally but only if the tenant contributes to the reduced outgoing.
  • Tenants must be offered an option to extend their lease if it would have expired so as to enable the repayment of deferred rent over that extended period.
  • All information provided by the tenant to the landlord is confidential but the landlord may give that information to the Commissioner of State Revenue as part of any land tax relief application.
  • A landlord or a tenant may refer any dispute to the Small Business Commission for mediation.
  • A landlord or tenant may be represented by a legal practitioner in the mediation of an eligible dispute. SLF Lawyers can assist you if there is a need for advice or representation as a landlord or as a tenant on any claim for rent relief.

Reach out to your SLF contact if you need any assistance, advice or representation.

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