The 2021 Commercial Tenancy Rent Relief Scheme (the 2021 Scheme) has been reintroduced to help small to medium-sized businesses who were in an eligible lease as at 28 July 2021, have an annual turnover of less than $50 million, and have suffered a loss in turnover of more than 30% during the pandemic.  It is important to note that as part of the 2021 Scheme there is a strict prescribed process that must be followed and key deadlines to be met by landlords and tenants alike as set out below.

In order to calculate eligibility, tenants can choose three consecutive months between 1 April 2021 and 30 September 2021 to compare to their turnover in the same three months in 2019.  The example provided is that if their turnover is proved to have reduced by 40% then rent is to be reduced to 40% and of the balance at least half must be waived and the remainder deferred.  While this is a guide to minimum amounts that landlords must offer, the ultimate arrangement needs to be negotiated between the parties and agreed between the landlord and tenant.  The regulations require that landlords and tenants work cooperatively in their negotiations.

The 2021 Scheme will apply retrospectively from 28 July 2021 and will run until 15 January 2022.

Application

The onus of providing documentation is really on the tenant under these regulations, but it is important for both the landlord and the tenant to be aware of the process and ensure that they meet the deadlines.

  1. The tenant needs to request rent relief from the landlord.  These requests must be in writing and meet certain information requirements, such as confirming eligibility and detailing their decline in turnover.
  2. The tenant then, within 14 days of their request, needs to provide specific supporting evidence and a Statutory Declaration confirming eligibility and that the information provided is true.
  3. Within 14 days of receiving the above request and supporting evidence, the landlord provide an offer of relief to the tenant in writing which must be, at a minimum, proportional to the tenant’s decline in turnover.

There are also deemed acceptance provisions that have been introduced that most likely will apply to any party who does not meet the deadlines imposed on them.

30 September 2021 Deadline

To apply for rent relief back dated to 28 July 2021, applications and supporting evidence must be provided to the landlord prior to 30 September 2021.  Any incomplete applications or applications made from 1 October 2021 will only be eligible from the date the complete application and supporting evidence is provided to the landlord, up to 15 January 2022 when the 2021 Scheme comes to an end.

 Mandatory Reassessment

If the 2021 Scheme applies to your circumstances and the tenant is receiving rent relief prior to 30 September 2021 then, the tenant must provide certain reassessment information to the landlord by 31 October 2021 for them to recalculate their offer based on the updated declined turnover.  This new arrangement would then be in place until 15 January 2022.  However, the reassessment deadline of 31 October is not complied with, it could be possible the tenant would only be eligible for the deferred rent portion of their existing agreement, not for the ongoing reduction of rent.

Landlord assistance

Landlords who are offering rent relief to the commercial tenants may be eligible for up to 25% land tax relief which has been offered under the similar scheme in 2020.

Additionally, there is a $20 million hardship fund to support landlords who are offering rent relief to their commercial tenants provided the landlords meet certain eligibility criteria.

How we can help

We can assist in numerous ways, including the following:

  • Provide advice regarding the 2021 Scheme in relation to your specific circumstances;
  • Assist commercial landlords reviewing and responding to applications for rent relief;
  • Preparing applications for rent relief;
  • Assessing eligibility criteria;
  • Assisting with collating supporting evidence for application;
  • Documenting enforceable agreements for rent relief;
  • Step into rent relief negotiations on your behalf, including attend VSBC mediations; and
  • Assist with relief negotiations even when the regulations do not apply.

Stacey Brennan
Lawyer & Chief of Staff