How do the new Commercial Tenancy Relief Scheme Regulations apply to you?

Feb 2, 2022

On 1 February 2022, the Victorian Government’s third generation of the Commercial Tenancy Relief Scheme Regulations (2022 Regulations) were brought into effect.  The 2022 Regulations operate from 16 January 2022.

As the 2021 Regulations expired on 15 January 2022, the 2022 Regulations provide measures for rent relief in Victoria between 16 January 2022 and 15 March 2022.

Given that the 2022 Regulations are a new piece of legislation, as opposed to an extension of the 2021 Regulations, eligible tenants must submit a fresh request to access protection between 16 January – 15 March 2022.

Eligibility

A key change between the 2021 and 2022 Regulations is eligibility.

The 2022 Regulations will apply to leases in effect on 16 January 2022. This means that any new leases that have come into effect since 29 July 2021 that were not eligible under the 2021 regulations will now have recourse to relief.

Further, an eligible tenant must be a ‘small entity’ with a turnover less than $10,000,000 in the 2020/2021 financial year. This is a substantial reduction from $50,000,000 under the previous regulations.

Decline in turn-over test

As has been the case previously, tenants will need to demonstrate a decline in turnover of at least 30%.

For the majority of leases, the Turnover Test Period is now January 2022 and the Comparison Period is January 2020. Therefore, tenants will be required to demonstrate that their turnover in January 2022 was 30% lower than it was in January 2020.

There are alternative tests available.

Relief request process and timeframes

The request process and applicable timeframes otherwise remain unchanged from the 2021 regulations.

Protections for tenants

As was the case in 2021, tenants will not be in breach of their lease for failure to pay rent or outgoings, provided that a valid request has been made between 16 January and 15 March 2022 and that rent paid is proportionately reduced by the disclosed decline in turnover.

The prohibition on rent increases will apply until 15 March 2022.

Lastly, any rent that has been deferred under existing rent relief agreements pursuant to the previous regulations will not be repayable until after 15 March 2022.  However, this is subject to the tenant remaining an eligible tenant who has requested rent relief under the 2022 Regulations.