The Victorian State Government will be introducing legislation today in relation to the new rent relief scheme for commercial tenants.
The scheme is expected to operate until January 2022.
Both landlords and eligible tenants should be negotiating now.
How will rent relief be calculated?
Rent relief for eligible tenants will be determined by comparing the turnover for the final quarter of the 2020/2021 financial year with the turnover from the final quarter of the 2018/2019. If the reduction in turnover is greater than 30%, then affected tenants will be eligible. The percentage drop will also determine the amount of initial rent relief available to the tenant.
Eligibility for the rent relief scheme will only need to be satisfied once. Tenants who are eligible at the commencement of the scheme will continue to be eligible for the duration of the scheme and the proportion of rent relief will be adjusted in line with their turnover.
What about new businesses?
To ensure that new businesses are also covered, the Victorian Government is putting special arrangements in place to determine turnover reduction for new businesses which were not operating in 2019. The Victorian State Government will also assist landlords with land tax relief of up to 25%. This will be in addition to any other relief offered.
For those tenants who are eligible under the new rent relief scheme, there is an agreement in place from the first Commercial Tenancy Relief Scheme that existing deferred rent repayments will be frozen until 15 January 2022. Small landlords who demonstrate acute hardship will be eligible to apply for payments as part of a $20 million hardship fund. Further details to come.
Is it enough?
The new rent relief scheme appears to provide assistance for those eligible tenants who suffered a reduction in turnover during the late May/June 2021 lockdown. However, what is not clear is how this new scheme will assist tenants who have recently suffered a reduction in turnover in the most recent July 2021 lockdown.