RENT RELIEF REGULATIONS UPDATE - OCTOBER 2020

Amendment to COVID Commercial & Residential Tenancies Rent Relief

The COVID-19 Omnibus (Emergency Measures) (Commercial Leases and Licences) Regulations 2020 (Vic) (“Amending Regulations”) have now been published, effective from 29 September 2020. The Amending Regulations provide for the extension of rent relief provisions, initially enabled by April’s COVID-19 Omnibus (Emergency Measures) Act (“Act”) and accompanying Regulations.   

Some of the changes brought about by the Amending Regulations include:

·        To extend the ‘relevant period’ to which rent relief applications apply for eligible leases, which was due to expire on 30 September 2020, to 30 December 2020;

·        To broaden the definition of what constitutes an “eligible lease”;

·        To provide the VSBC and VCAT with additional order making powers.

As noted above, the operation of the commercial tenancy rent relief period has been extended to 31 December 2020. Deferred rental payments also cannot be claimed by landlords until after this date. Further, the Amending Regulations create a new process for applications for rent relief, meaning that in practice, tenants who have already applied and been granted rent relief will have to reapply for this period. Notably, relief will only be applied from the date the tenants make a valid request, so applications should be made as early as possible.

The “eligible lease” definition has been broadened. As we detailed in our earlier Omnibus review blog, an “eligible lease” required the tenant to be an SME and eligible for, as well as a participant in the Federal Government’s JobKeeper scheme. This definition creates problems for tenants who are sole traders or operate a service company, and, unlike the requirements of the Federal Government’s Code of Conduct, necessitates active participation in JobKeeper rather than mere qualification. In any case, the amendments have removed the requirement for the tenant to be an employer, allowing for sole traders and a greater range of SME tenants to apply for rent relief.

The tenant’s request for rent relief must be accompanied by the following:

-       A statement from the tenant:

o   That the lease is an eligible lease; and

o   That the lease is not excluded from the operation of the Regulations under section 13(3) of the Act; and

o   Setting out the tenant’s decline in turnover associated with the premises (and no other premises); and

-       Information showing that the tenant:

o   Is an SME entity; and

o   Is an entity entitled under sections 6, 11 or 12A of the JobKeeper rules to a JobKeeper payment, including:

§  The receipt number issued by the Commissioner of taxation when the tenant elected to participate in the JobKeeper scheme; and

§  A copy of the tenant’s most recent notice under the JobKeeper rules to the Commissioner of Taxation;

-       Information reflecting the tenant’s stated decline in turnover, including at least one of the following:

o   Extracts from the tenant’s accounting records;

o   The tenant’s business activity statements relating to the relevant turnover test period;

o   Statements issued by an ADI in respect of the tenant’s account;

o   A statement prepared by a practising accountant.

In accordance with the Premier’s announcement on the VSBC’s ability to make orders for rent relief, the Amended Regulations allow for “the making of orders directing landlords under eligible leases to give or agree to specified rent relief to tenants under eligible leases (binding orders) and the content of such orders;

The process for applications by tenants under eligible leases for binding orders (rent relief applications) including the content of rent relief applications and documents that may accompany rent relief applications.” These Amending Regulations attach these significant powers to the VSBC. The review and enforcement of binding orders by VCAT is also enabled by the Amending Regulations.

The Amending Regulations create more stringent requirements around the application process, and advantage tenants who make valid applications early. It is therefore important that tenants ensure their applications are water tight but also lodged as soon as possible. Whether you are a landlord or a tenant, we specialise in these rental arrangements and will advance your commercial interests thoroughly, sensibly and expeditiously.  

KKP Final Comment

We remain fully operational and accessible despite our office closure. Our expert assistance allows you to focus on what matters, and you can rest assured that your legal matters are in good hands as we drive to achieve your best outcome. If you need assistance with any legal matters or require a consultation, please do not hesitate to reach out to enquiries@kerrpartners.com.au.