Victorian commercial tenants are now able to request further rent relief from their landlords, under the new Commercial Tenancy Relief Scheme Regulations 2021 (the “Regulations”). The Regulations, released on 24 August 2021, come as welcome news for small business owners, amidst the numerous extended lockdowns.

Eligibility

To be eligible for rent relief, a tenant must show at least a 30% decline between:

• its turnover during the “turnover test period” which is generally any 3-calendar-month period between 1 April 2021 and 30 September 2021; and
• either –
  • its turnover during the “relevant comparison period”, which is the 3-calendar-month period in 2019 corresponding to the “turnover test period”; or
  • its turnover as calculated under one of the “alternative turnover tests”.

Alternative turnover tests explained

The alternative turnover tests are new tests, which did not exist under the previous Regulations (CTRS) from March 2020. These tests are applicable in certain circumstances, including where:

• the tenant commenced trading on or after 1 April 2019;
• a business acquisition, disposal or restructure by the tenant changed its comparison turnover;
• the tenant’s business has irregular turnover;
• the tenant is a sole trader or small partnership with sickness, injury or leave during the relevant comparison period; and/or
• the tenant temporarily ceased trading during the relevant comparison period.

Commencing the request process

The tenant’s rent relief request must be accompanied by a statement setting out the tenant’s eligibility for rent relief and how its decline in turnover is calculated. In the statement, the tenant can also specify any circumstances that the tenant would like the landlord to consider in making a rent relief offer, which the landlord must then take into account.

Within 14 days of making the request the tenant must provide:

• accounting record extracts, BAS statements, statements from an authorised deposit-taking institution and/or a statement prepared by a practising accountant; and
• a statutory declaration made by the tenant or its authorised officer.

Once the tenant submits its rent relief request and all required supporting information to the landlord, the landlord must offer the tenant rent relief within 14 days.

At a minimum, such rent relief must be proportional to the tenant’s decline in turnover and at least 50% of it must be in the form of a rent waiver. This minimum requirement is the same as that under the previous CTRS regulations.

Other important provisions

Notable inclusions to the new Regulations include:

• backdating of the rent relief to apply from 28 July 2021, but only if the tenant’s request is made by 30 September 2021;
• a mandatory reassessment date on 31 October 2021, by which the tenant must provide the landlord with updated information, and any agreed rent relief will be reassessed;
• further deferral of any deferred rent under the previous CTRS regulations until 15 January 2022; and
• a prohibition on rent increases during the rent relief period, which the landlord can never claim.

Our team at Sanicki Lawyers can assist you in putting together your rent relief request, together with the necessary supporting information, so that it complies with the new Regulations.

To discuss your eligibility for rent relief under the Regulations, please do not hesitate to contact Jonathan Xian or Darren Sanicki.