Extension of Victoria’s Commercial Tenancy Relief Scheme – what we know so far…

As is often the case, the political announcement has preceded the legal detail. Not until the detail comes will we know what is happening and how things will work in practice. But we can glean some useful information from Premier Daniel Andrews’ announcement yesterday (thanks to leasing barrister Sam Hopper for his prompt article alerting us to the news).

1. The ban on evictions and rent increases will be extended to 31 December 2020. We assume this will ban evictions for non-payment of rent as well as evictions for failure to trade.

2. There is no mention yet of whether this will also include an extension of compulsory rent relief. However, there is a hint that the CTRS will be amended in favour of tenants to ensure that rent relief is proportionate with turnover reduction. To us at Moores, this can only mean that the rent relief measures will continue until 31 December and that landlords will be pushed harder to accept a rent reduction that is more aligned with the tenant’s turnover reduction (maybe even point for point).

3. The ban on evictions and/or rent increases will not apply in ‘specific circumstances’. That is already the case – the CTRS doesn’t apply to everyone and doesn’t excuse other breaches of lease. It is not clear yet what ‘specific circumstances’ Daniel Andrews has in mind – are they new or existing? One thing we know – not everyone will benefit from the CTRS and it will be important to know whether you’re in or out.

4. The new arrangements are intended to give the Victorian Small Business Commission ‘greater capacity to make an order on rent relief if a landlord refuses to respond to rent relief requests.’  This is something brand new. To date, the SBC has been effective as an advisor and mediation service. One might expect the larger landlords (like Westfield, who seem to be sick of negotiating with some of their retail tenants) to challenge the ability of the SBC to make binding rulings over their leases.

5. Land tax relief for 2020 is increasing from 25% to 50% (where rent relief has been giving over minimum levels) and a new fund is being established to make payments available to landlords (up to $3,000 per tenancy). No doubt this is intended to create additional incentive for landlords to ‘come to the party’. We doubt it will go far enough to undo the feeling that government has effectively made landlord’s a ‘shock absorber’ for the Victorian economy.

We will keep you updated as further information becomes available.

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