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What’s going on with Victoria’s commercial tenancy relief?

By Grace Ormsby and Miranda Brownlee
22 December 2020 | 10 minute read
Melbourne high aerial reb

Social media was the first place that any Victorian had heard of an extension to the state’s Commercial Tenancy Relief Scheme — but also the last. A lawyer has weighed in on what the 2021 version of the scheme may look like.

In a letter to members, the Real Estate Institute of Victoria (REIV) acknowledged state minister for small business Jaala Pulford’s announcement on the weekend of 12 and 13 December that the Commercial Tenancy Relief Scheme was being extended to 28 March 2021.

REIV president Leah Calnan said “it was extremely disappointing to hear of an important change via social media”.

Ms Calnan then confirmed the extension of the Commercial Tenancy Relief Scheme would be extended to align with the Residential Tenancies (COVID-19 Emergency Measures) Regulations 2020, stating the REIV had been in communication with a number of government agencies to seek clarification.

The letter also outlined that the REIV had provided “emphatic feedback to the government regarding the lack of prior engagement and advice to the real estate sector”.

It then revealed REIV CEO Gil King had received an email acknowledgement that social media “was not the right communication approach to inform the sector which will be required to implement the government’s policies”.

The REIV then flagged that, to date, information portals such as the VSBC website have not been updated with this information, while no statements have been made by the Premier on the matter either. A check by REB has re-confirmed this to still be true as at 22 December 2020.

So, what does the extension actually mean?

Jaala Pulford said this means freezes on rent increases and bans on evictions for eligible small businesses that have requested rent relief will continue until that date.

Commercial landlords will be required to provide rent relief in proportion to the tenant’s fall in turnover. Support for landlords has also been extended, she said.

With no further information to suggest the contrary, according to DBA Lawyers director Daniel Butler, it’s likely that the third tranche of relief will be based on the same legislation and regulations as the second round of relief which spanned from 28 September to 31 December 2020.

Mr Butler was speaking to REB’s sister brand, SMSF Adviser, when he noted that Victoria did update and adjust its regulations quite substantially between the first and second rounds of relief.

“The second round of changes were a lot tighter and more favourable for the tenant. In the first round, there was one factor [where] you had to consider the landlord’s ability to actually provide the relief, but that was taken out in the second round,” Mr Butler said.

He added that if the tenant is no longer in receipt of JobKeeper, it’s likely that they would not qualify for the relief; however, the details of the regulations have not yet been released.

“Under the Victorian provisions, when the second extension was announced, the tenant had to actively ask for the relief in proper written form and supply the right documents about its turnover and its qualifying potential under the work JobKeeper scheme in order for the landlord to then reply,” he explained.

“The further rent relief was conditional upon that request and the further rent relief only commenced from the second request.

“I would dare say that a lot of people haven’t gotten that documentation in place.”

Mr Butler has also advised of the need to keep evidence showing there has been a process of negotiation.

“We should see the tenant supply the requisite information, so the tenant must make a further request and provide sufficient information that it does qualify as an SME entity, that it is a JobKeeper participant, including a receipt number issued by the ATO and a copy of the tenant’s most recent JobKeeper notice from the ATO,” he stated.

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