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COVID-19 and changes to the Commercial Tenancy Relief Scheme in Victoria

Emma Dunlevie, Mark McKinley, Samantha Taylor, Melanie Young and Lee Be

The Commercial Tenancy Relief Scheme has been extended for commercial properties in Victoria in response to the ever-changing COVID-19 landscape.

The Victorian Government has recently introduced the COVID-19 Commercial and Residential Tenancies Legislation Amendment (Extension) Bill 2020 (Extension Bill) to amend the current COVID-19 Omnibus (Emergency Measures) Act 2020 (Act) (and the Residential Tenancies Act 1997, which is not addressed in this Alert).

What changes will be made once the Extension Bill becomes law?

  • The COVID-19 Omnibus (Emergency Measures) (Commercial Leases and Licences) Regulations 2020 (Regulations) are currently in place until 29 September 2020. They provide a legal framework for rent relief negotiations, and prohibit certain lease terminations and rent increases. See our previous Alert here.

    The Extension Bill amends certain provisions of the Act which facilitate the Commercial Tenancy Relief Scheme, to allow for the extension and amendment of regulations up to 26 April 2021. We await the publication of new regulations for full details, but the Government has indicated that the rent relief framework in the new regulations will only be extended to 31 December 2020. The date of 26 April 2021 is provided in the Extension Bill to allow for a contingency and for further regulations to be made if required.

  • The definition of “eligible lease” will be amended.

    • It will now also include a “retail lease or a non-retail commercial lease or licence of a specified class”. A “specified class” is not defined in the Extension Bill but further detail should be found in the new regulations once published.
    • The Act contains a definition of “eligible lease”, which requires the tenant to be an SME entity and an employer who qualifies for and is a participant in the JobKeeper scheme. This prescriptive definition will be removed, so that the eligibility requirements for rent relief can be included in the regulations made under the Act. The second reading speech indicated that this amendment “will confirm the Government’s intent that sole traders are eligible to participate if they are participating in JobKeeper and will increase flexibility for the Government to adjust as the JobKeeper program evolves.”

    As such, we understand that the eligibility requirements will continue to require that the tenant qualifies for and is a participant in the JobKeeper scheme and has an annual turnover of up to $50 million.

  • The Victorian Small Business Commission will be given the power to make binding orders following on from mediations between the tenant and the landlord in certain circumstances. Applications may then be made to VCAT to enforce the binding orders or dispute the binding orders made by the Victorian Small Business Commission. The new regulations are expected to set out the scope of these new powers.

It is important that both landlords and tenants continue to pursue rent relief negotiations and remain compliant with their respective obligations under the Act and the Regulations.

We will publish a further Alert once the Extension Bill becomes law, and the new regulations are published.

How we can help

For further advice on compliance with the Extension Bill, the Regulations or a commercial leasing strategy in respect of your lease or leasing portfolio, please contact Mark McKinleyEmma DunlevieSamantha Taylor, Melanie Young or Lee Be

If you would like to keep in touch with Alerts and Insights from our expert Property team, you can subscribe to our mailing list here.

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