Victoria’s Commercial Tenancy Relief Scheme extended through to 15 March 2022

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 By Pablo Fernandez, Partner and Matt Minas, Lawyer

The Commercial Tenancy Relief Scheme Regulations 2022 (Vic) (2022 Regulations) were gazetted on 1 February 2022 and apply retrospectively from 16 January 2022[1] through to 15 March 2022,[2] effectively extending the Commercial Tenancy Relief Scheme Regulations 2021 (Vic) (2021 Regulations) which ended on 15 January 2022.

The new regulations are a standalone piece of delegated legislation (rather than an extension of the 2021 Regulations). The 2022 Regulations nonetheless are largely similar to the 2021 Regulations.

This article highlights the key differences between the 2022 Regulations and the 2021 Regulations. We recommend that it be read in conjunction with our comprehensive guide to the 2021 Regulations.

Key differences

Rent relief process and applicability period

Tenants must re-apply for rent relief. Applications under the 2021 Regulations are distinct and apply only to the applicable period under those regulations.

While there is no set date by which a rent relief request must be made under the 2022 Regulations, once made, the tenant’s Rent Relief Period will be backdated to commence on 16 January 2022 and expire on 15 March 2022.[3]

Unlike the 2021 Regulations, the 2022 Regulations do not feature a mandatory reassessment of rent relief.

Eligible Lease

The 2022 Regulations apply to leases and licences that were ‘in effect’ on 16 January 2022, meaning that new tenants who were not eligible under the 2021 Regulations may now find themselves eligible.

 

Eligible Tenant

 

The 2022 Regulations only apply to ‘Small Entities’ with an annual turnover of up to $10m.[4] This marks a substantial reduction from the $50m ‘SME Entity’ limit in the 2021 Regulations and means that a large number of previously eligible medium sized tenants will no longer be eligible under the 2022 Regulations.

 

Decline in Turnover Test

 

 

 

 

 

 

 

The Decline in Turnover Test from the 2021 Regulations remains and operates in a similar fashion.

To be eligible, a tenant’s turnover in the Turnover Test Period must be at least 30% (or 15% in respect of charities and schools) less than their Comparison Turnover.

The relevant Turnover Test Period and Comparison Turnover periods are set out in the table below:

Turnover Test Period[5] Comparison Turnover
The month of January 2022 The month of January 2020[6]
The month of December 2021, if:

(a)   during January 2020, the tenant’s business temporarily ceased trading for a week or more due to an event or circumstances outside the tenant’s control; and

(b)   the tenant’s business resumed trading before 16 March 2022.

The month of December 2019[7]

The 2022 Regulations also include several alternative Comparison Turnover tests which are similar to those in the 2021 Regulations. The most relevant example is where the tenant’s business began trading on or after 1 January 2020, the Comparison Period turnover will be equal to the tenant’s average monthly turnover from the date that they commenced trading through to 31 January 2022.[8]

 

Tenant protections

The tenant protections against adverse action and the prohibition on rent increases from the 2021 Regulations continue to apply during the new Protection Period commencing on 16 January 2022 and expiring on 15 March 2022.[9]

 

Deferred rent

Repayment of any rent deferred under a previous rent relief agreement under the 2021 Regulations or the COVID-19 Omnibus (Emergency Measures) (Commercial Leases and Licences Regulations 2020 (Vic) must be further deferred until 15 March 2022, unless the parties agree otherwise in writing.[10]

 

[1] 2022 Regulations r 3.

[2] 2022 Regulations r 66.

[3] 2022 Regulations r 26.

[4] 2022 Regulations rr 10, 11.

[5] 2022 Regulations r 14.

[6] 2022 Regulations r 15(1)(a).

[7] 2022 Regulations r 21.

[8] 2022 Regulations r 16.

[9] 2022 Regulations rr 24, 33.

[10] 2022 Regulations rr 30, 31.

For further information, please do not hesitate to contact us.

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