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Property update: Commercial Tenancy Relief Scheme extension

Jan 16, 2022

The Victorian Government announced it will extend the Commercial Tenancy Relief Scheme (CTRS) by two months to 15 March 2022. The CTRS was due to end on 15 January 2022.

While the new Regulations are yet to be released, the Government states that:

  • The scheme will apply to tenants with:
    • an annual turnover of $10 million or less (down from $50 million); and
    • at least a 30% decline in turnover.
  • The new Regulations will be retrospective and take affect from 16 January 2022.
  • Landlords will be required to provide continued proportional rent relief in line with a reduction in turnover, with at least half of that rent relief offered by way of waiver of rent.
  • For tenants with existing agreements repayment of deferred rent, the repayment obligation will be paused until 15 March 2022.
  • The ‘freeze’ preventing landlords increasing the rent under the lease will continue.
  • The eviction moratorium will also be extended, meaning eligible tenants cannot be evicted without undertaking mediation through the VSBC.

Questions remain

Anyone who has attempted to navigate the changes to the CTRS appreciates the complexities involved. This latest announcement raises a number of questions:

  • Will it be necessary for tenants with an existing rent relief agreement to reapply to landlord for rent relief, or provide updated financial information, for this further two months?
  • Will the new Regulations apply to tenants who have not previously sought rent relief? if such tenants can apply, will rent relief be retrospective to 16 January 2022 (or some other date)?
  • Will the landlord be required to offer an extension of the lease term, if rent is deferred?
  • Will the strict 15 day timeframe and deemed acceptance of the landlord’s offer of rent relief again apply?
  • Does the ‘freezing’ of any rent increase or review mean the rent increase or review is voided (as under the current Regulations).

The Victorian Small Business Commission’s initial guidance states, “Where an existing rent relief agreement is in place, tenants and landlords can continue that arrangement.”

However, this may not be appropriate, depending on the individual circumstances. Parties should exercise caution before agreeing to an extended arrangement without understanding how the new Regulations will apply.

We will provide a further update once the new Regulations are released.

More information

For more information, or advice on any of the above, please contact Morgan Scholz, Head of Property, on (03) 8600 8890 or mscholz@kcllaw.com.auMark Yaskewych, Principal Lawyer, on (03) 8600 8830 or myaskewych@kcllaw.com.au, or Geoff Kliger, Senior Special Counsel, on (03) 8600 8878 or gkliger@kcllaw.com.au.

Note: This update is a guide only and is not intended to constitute legal advice.