In response to the ongoing impact of COVID-19, the Victorian Government has now released the Commercial Tenancy Relief Scheme Regulations 2022 (Vic) (2022 Regulations) which extends the entitlement to rent relief and related protections for certain small businesses.
Our previous publication on the Commercial Tenancy Relief Scheme Regulations 2021 (2021 Regulations) can be found here.
The 2022 Regulations are substantively similar to the 2021 Regulations however certain key differences are evident. Those differences are summarised below:
The 2022 Regulations apply retrospectively for the protection period of 16 January 2022 to 15 March 2022.
The criteria for an eligible lease remains largely unchanged.
However, where previously an eligible tenant referred to an SME with an annual turnover less than $50 million, the 2022 Regulations rename this concept as a small entity and reduce the annual turnover threshold to $10 million. Criteria for an eligible tenant is otherwise unchanged.
An eligible lease is now a retail lease or commercial lease or licence:
Extensions, renewals and variations on substantially the same terms are still considered a continuation of an existing lease.
A tenant is now an eligible tenant if the tenant:
The definition of turnover and the grouping provisions relevant to assessing the $10 million turnover threshold both remain unchanged from the 2021 Regulations.
The decline in turnover test still requires a tenant to demonstrate a decline in turnover of 30% or more but the period for assessing this decline has changed.
In most cases the turnover test period is now, either:
However, similar alternative comparison turnover methods still apply in cases where tenants have insufficient comparison turnover or where intervening factors have impacted turnover.
Payment of deferred rent (including any agreement to defer rent made under the 2021 Regulations or its 2020 predecessor) cannot occur before 16 March 2022 unless agreed otherwise by the parties.
The duration for payment of deferred rent remains unchanged, being payable over the longer of 24 months and the balance of the current term.
The requirement for a subsequent reassessment and adjustment of rent relief based on a change to the decline in turnover no longer applies.
Eligible tenants must make a new request for rent relief under the 2022 Regulations, following the same two-step process applicable under the 2021 Regulations.
Unlike the 2021 Regulations there is no longer a fixed deadline (previously 30 September 2021) enabling tenants to secure retrospective relief. In view of this omission, tenants are encouraged to apply early however past experience suggests that a retrospective application will be valid.
Additional key entitlements and obligations remain unchanged from the 2021 Regulations:
Our team is ready to advise and assist those dealing with rent relief negotiations and disputes. We invite you to contact our office should you require any assistance.
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Alexandra Walker, Partner