We could all use a little relief, but it's a little (lot) more complicated this time around.
While in principle, the "idea" of rent relief was passed in July, it took until late August for the legislation to drop.
We have noted the scheme in the previous post, but with the reminder from vic.gov.au yesterday that you must apply before 30 September 2021 to get relief backdated to 28 July 2021, I thought I would revisit where we are at.
We note, any requests provided after 30 September 2021, the rent relief will only apply from the date the request is made.
WHAT IS IT?
The Commercial Tenancy Relief Scheme (the scheme) has been introduced by the Victorian Government to ease the financial hardship faced by commercial tenants and landlords as a result of the coronavirus (COVID-19) pandemic.
The original scheme was introduced last year and was reintroduced on 28 July 2021.
At a high level, commercial landlords are required to give their tenant rent relief that:
- is in proportion to their tenant's fall in turnover because of coronavirus, if down at least 30%
- is made up of a minimum 50 per cent rent waiver (the remainder can be made up of a rent deferral)
The scheme is effective from 28 July 2021 and will run until 15 January 2022. There will be a freeze on rent increases until 15 January 2022.
A mandatory reassessment on 31 October 2021 is required to check in and assess whether circumstances have changed and rent relief needs to be adjusted. This will be based on the quarter ending September 2021 versus September 2019.
As part of the process, you are required to provide certain information to your landlord. This can include:
- extract of your financials
- business activity statements
- bank statements
- statement prepared by a practising accountant (that's us)
The summary table provided below is thanks to our friends at Velocity Legal, but to summarise the summary – what do you need to do now?
WHAT DO YOU NEED TO DO?
You will be required to make a request in writing to your landlord, including the following:
- that you are an eligible tenant
- that you satisfy the turnover test including alternate test if applies
- the reduction in rent requested
- any other circumstances that you would like the landlord to consider
For relief to be backdated to 28 July 2021, you need to provide the above to your landlord before 30 September 2021.
The Victorian Small Business Commission has provided a templated letter for making a single, complete request for relief here.
We can assist in reviewing the most advantageous period, in providing a statement of evidence (by a practising accountant) and in preparing your letter to the landlord but ask that all requests be made before 27 September 2021 for relief prior to 30 September 2021.
If you are a landlord and have assisted or wish to assist your tenants with rent relief, please reach out. You may be eligible for a 25% reduction in land tax as well as some further assistance under the Commercial Landlord Hardship Fund 3. Link here
The key takeaways from the Commercial Tenancy Relief Scheme Regulations 2021 are set out in this table courtesy of Velocity Legal CLICK HERE