Commercial and Retail Lease COVID 19 Rent Relief Scheme
As you May be aware the Victorian Government has extended the Rent relief Scheme from the initial expiry date of 29 September 2020 to 31 December 2020.
However, there are some significant changes to the requirements of the scheme which effect the rights of both tenants and landlords.
Firstly, to get the benefit of the relief over the next three months the tenant is required to make a new complying application to the landlord for relief, unless there is an existing agreement in place for the period to 31 December 2020.
To be a complying application the tenant must provide the landlord with certain information being: –
- Their Jobkeeper reference number;
- A copy of their most recent Jobkeeper return;
- A copy of their BAS Statement or and extract of their accounting records for the September 2019 quarter showing their turnover for the particular premises for which rent relief is sought; and
- A copy of their BAS Statement or and extract of their accounting records for the September 2020 quarter for the premises for which the relief is sought showing a reduction of more than 30% of turnover for those premises.
If the tenant makes a complying application the Landlord must grant rent relief of at least equivalent to the reduction in turnover 50% of which must be by waiver and 50% by deferral. If a complying application is made a landlord cannot evict a tenant for non payment of rent or outgoings.
Any rent relief does not commence until after a complying application is made, unless there is an exiting agreement in place which applies after 29 September 2020.
If there are deferred rental payments from the period 29 March 2020 – 29 September 2020 payment of these amounts is further deferred to after 1 January 2021.
If a complying application is not made by the tenant, it appears as though the tenant is no longer entitled to protection from eviction from the premises. However, it should be noted that if the lease is terminated the landlord is required to attempt to mitigate its loss and seek to release the premises, which in the current climate could be at a significantly reduced rental.
If the lease remains on foot the tenant is liable for the rental as a debt and the landlord has no requirement to mitigate.
In these circumstances it may be prudent to defer termination to maximize the return to the landlord.
It should also be noted that it is advisable that the landlord give the tenant notice of the requirement to make a complying application before exercising its right to terminate for failure to pay any rental or outgoings.
The above information is general advice and should not be relied upon as circumstances differ for each case, and the prior discussions and agreements between landlords and tenants may affect the parties rights it is important to contact us to obtain advice regarding your specific circumstances prior to taking any action, or entering into any further agreement.
Please contact Neville Windebank of our office to discuss your specific circumstances.