Thinking | 2 February 2022

Commercial Tenancy Relief Scheme for Victorian businesses extended

By Natalie Bannister and Ryan Thomson

The Victorian Government has extended the Commercial Tenancy Relief Scheme (CTRS) until 15 March 2022 in an effort to further mitigate the effect of COVID-19 measures on Victorian small businesses.

Brought into effect on 1 February 2022 and applying retrospectively from 16 January 2022, the new CTRS Regulations 2022 continue to provide relief and protections for retail and commercial tenants experiencing financial hardship.

The extended scheme, however, is only available to ‘small entities’, being businesses with an annual turnover of less than $10 million which have suffered a turnover decline of at least 30%. This is a significant reduction from the limit of less than $50 million in turnover that applied in 2020 and 2021.

A business’ decline in turnover will typically be assessed on the business’ turnover in January 2022 and compared to the month of January 2020, unless an ‘alternative comparison turnover’ category applies.

Landlords will continue to be obliged to provide proportionate rent relief to eligible tenants. This means that rent relief at a minimum will need to be provided in an amount proportionate to the tenant’s decline in turnover. No less than 50% of the rent relief must be also waived, with the balance being repayable no earlier than 15 March 2022.

The prohibition on rent increases and the eviction moratorium also continue to apply to eligible leases. Landlords therefore will be prohibited from evicting tenants without first undertaking mediation through the Victorian Small Business Commission.

The regulations provide that rent cannot be increased under a lease during the protection period (16 January 2022 to 15 March 2022). Any provision of a lease that provides for a rent review during that period would lead to a rent increase is void.

Eligible tenants can obtain relief from their landlord by making a written request and providing evidence that they meet the scheme’s eligibility criteria.

In line with the previous scheme, commercial landlords that provide rent relief to eligible tenants may be eligible to receive support through the $20 million Commercial Landlord Hardship Fund.

Hall & Wilcox has specialist expertise in commercial and retail leasing and a number of our senior lawyers are named in the Best Lawyers list.

If you have any questions about commercial or retail leasing matters and rent relief or require any assistance with them please contact Natalie Bannister or Jane Baddeley.

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