Navigating rental relief in Victoria
The Victorian Government has introduced new legislation to provide rent relief to eligible commercial tenants who have experienced a reduction in turnover of more than 30% during the pandemic, under the new Commercial Tenancy Relief Scheme 2021 (the New Scheme).
For more information about the New Scheme, please check out the Victorian Small Business Commission’s (VSBC) website which can be found by clicking on the links below:
the Victorian Government’s Commercial Tenant Relief Scheme 2021 FAQs;
and the recently released regulations for the New Scheme.
Eligibility:
Eligible Leases: Retail leases, non-retail commercial leases and licences that are in effect on 28 July 2021 and aren’t excluded under the Regulations.
Eligible Tenants: Small to medium sized tenants operating in Australia as of 28 July 2021 who have an aggregate turnover less than $50 million and who satisfy the decline in turnover test.
If you are unsure whether you are eligible for rent relief, please refer to the Victorian Government Website by clicking here.
Calculating Decline in Turnover
The decline in turnover test includes comparing the turnover between two testing periods and that test confirms a decline in turnover which is equal or exceeding 30%. If you are a registered charity, the decline must be equal or exceeding 15%.
Make sure that you insert the turnover testing periods into the Rent Relief Statement in the template letter.
Your turnover figures must include any state government COVID-19 Grants and all revenue from online sales and from other premises. You don’t have to include federal government grants.
There will be a mandatory reassessment of turnover on 31 October 2021 which may result in an adjustment in the rent relief in line with changes in turnover. The reassessment will require you to provide additional information in writing to the Landlord and a statutory declaration. Please keep this in mind and ensure you diarise this date.
Our rental relief calculator can assist you in determining the decline in revenue based on these three tests.
Valid Rent Relief Requests:
In order to be eligible for rental relief then the Regulations require you to submit a valid request. The steps are as follows:
A valid request must in writing accompanied by a statement from you confirming:
o that you are an eligible tenant; and
o that you satisfy the decline in turnover test; and
o providing the following details:
your turnover;
the turnover test period;
comparison turnover test period;
the decline in turnover.
You have 14 days from when you issue the request to the landlord to provide mandatory supporting information and a statutory declaration.
You have only three attempts at making a valid request for rent relief, so it is important that the mandatory supporting information provided to the landlord and matches the Rent Relief Statement in your letter.
Please note that if you provide false or misleading information, you may be in breach of the New Scheme’s regulations and have committed an offence.
Mandatory Supporting Information
In making a valid rental relief request you must provide the mandatory supporting information as part of your request.
The mandatory support information includes:
o Evidence of turnover: A tenant’s eligibility for the rent relief under the New Scheme can be demonstrated through providing a standard letter from their Accountant evidencing the turnover figures, testing periods and the reduction in turnover.
o Statutory Declaration: You must provide the landlord with a statutory declaration made by you (if you are an individual tenant) or an authorised officer of the tenant (if the tenant under the lease is a company). The statutory declaration must state that you/the tenant is an eligible tenant and that the information provided by you is true to the best of your knowledge and belief.
Finally, you may wish to provide further information to the Landlord about the turnover testing and comparison periods to ensure you’re providing all information necessary to support your rent relief request, such as:
o a statement of financial position, outlining income, expenses, assets and liabilities (preferably audited or certified by a chartered accountant);
o financial statements for the impacted location, including, P&L or Income Statement or Balance Sheet;
o report from an accountant or financial adviser with evidence that the business has experienced a substantial reduction in its ability to pay rent due to the impacts of COVID-19; or
other relevant information depending on the nature of the business, for instance, evidence of a decline in sales or loss of clients/projects and the consequential anticipated turnover for the current quarter, which shows how circumstances have changed as a result of COVID-19.
Calculating Rent Relief Proposals
We’ve created a rent relief calculator to assist you in determining the rent deferral and rent waiver amounts.
The current rental amount you use should be exclusive of GST and Outgoings. If the rent payable under your lease includes outgoings (e.g. a gross lease), then you can use the rental amount which includes outgoings.
If you need assistance with the calculator and determining the appropriate period of time, then we recommend you speak with your accountant.
Need more help or the landlord is not complying with the Regulations?
Then please feel free to contact the Law Squared team via email at [email protected] or by phone on (03) 9008 5954 and we can discuss ways our team can assist.