Blog

Rent relief is back in Victoria after the release of new government regulations on Tuesday 1 February 2022. The Commercial Tenancy Relief Scheme Regulations 2022 reintroduce previous Victorian COVID-19 rent relief schemes with several changes. This article summarises the 2022 Scheme to inform lease negotiations between commercial landlords and tenants.

Am I eligible for rent relief?

You are eligible for rent relief under the Scheme if:

• you are a tenant under a retail lease, commercial lease or commercial licence which was in effect on 16 January 2022;
• you carried on business in Australia, or were a non-profit body or deductible gift recipient on 16 January 2022;
• you had an annual GST turnover of under $10 million in the 2020/21 financial year;
• you satisfy the decline in turnover test;
• the lease is not an agricultural or farming lease; and
• you are not an excluded tenant under the regulations (including government bodies, liquidated entities and listed corporations).

What is the decline in turnover test?

You satisfy the decline in turnover test if you experienced a decline in turnover of 30% or more because of the pandemic. The threshold is 15% for non-profit bodies, except for schools and some universities. Turnover includes amounts from online sales.

Decline in turnover (if you began trading before 1 January 2020) is calculated by comparing your turnover in January 2022 from your turnover in January 2020. Several alternative tests exist for businesses in different circumstances, including:

• If you began trading on or after 1 January 2020, compare your turnover in January 2022 from your average monthly turnover from the start of trading up to 31 January 2022.
• If you were affected by natural disaster during January 2020, compare your turnover in January 2022 with your turnover in January 2019.
• If you stopped trading temporarily during January 2020, compare your turnover in December 2021 with your turnover in December 2019.

What are my obligations as a commercial landlord?

Under the Scheme, commercial landlords must offer rent relief upon written request by their tenants. The rent relief must:

• be at least proportional to the tenant’s decline in turnover; and
• waive at least 50% of rent, unless otherwise agreed between the parties.

You are also prohibited from evicting commercial tenants and increasing rent until 15 March 2022, provided that the tenant has:

• properly requested rent relief as set out below; and
• continued to pay a portion of rent at their regular amount reduced by the percentage of their decline in turnover.

How do I apply for rent relief as a tenant?

Tenants must request rent relief in writing from their landlord, accompanied by:

• a statement that you are an eligible tenant under the 2022 Scheme;
• a statement that you satisfy the decline in turnover test, with supporting evidence;
• a statutory declaration stating that you are an eligible tenant and that the information you have provided is true; and
• any other information you wish the landlord to consider in making a rent relief offer.

How long will the 2022 rent relief Scheme operate?

The Scheme will have retrospective effect, applying from 16 January 2022 until 15 March 2022.

What should I do next?

• The Scheme operates on a timely basis, and parties to commercial leases are urged to begin negotiations promptly to avoid being shut out of rent relief.
• Eligible tenants should begin compiling evidence of turnover and drafting written requests for rent relief.
• Commercial landlords and tenants may wish to obtain professional legal advice to inform their lease negotiations and ensure compliance with the Scheme.

Gladwin Legal are experts in commercial leasing and have extensive experience in advising landlords and tenants. If you would like to know how we can help, please contact us at or 1300 033 934.