Extended CTRS | Update 19 - effects of Covid-19 on commercial tenancies

In the immortal words of Russell Casse in the greatest film of all time (well, top 5):

Hello boys, I’m baaaaaaaaaaaaaaaaack

[for the clip (you’re welcome) see here - https://www.youtube.com/watch?v=PirVtiJuvDs]

CTRS Mach.....5?

On 15 January 2022 the Minister for Small Business, Jaala Pulford, announced an extension to the commercial tenancy relief scheme. The Minister's press release can be seen here: https://www.premier.vic.gov.au/sites/default/files/2022-01/220115%20-%20Commercial%20Tenancy%20Support%20Extended.pdf

The extended scheme will now run until 15 March 2022, allowing eligible tenants rent relief until that date from 15 January (which is the date the 2021 Regulations would otherwise have ended).

As it stands the enabling legislation passed back in August allows the Minister to make regulations in connection with the scheme through to 30 April 2022 – so no further reference to Parliament will be required to give effect to the extension.

It is reasonable to expect the substantive elements of the scheme as extended will be consistent with the scheme as it has run to date.

The extended scheme will only be available to tenants with annual turnover of $10,000,000 or less (a substantial reduction on the $50,000,000 threshold previously applied). Tenants will ned to demonstrate a 30% downturn in turnover, but details of the comparison period for calculation of that downturn have not been provided.

Eligible tenants who have had rent deferred will have their the date they need to commence repayment pushed back until 16 March 2022.

The press release notes that landlords will continue to be prevented from taking action against their tenants for non-payment of rent (the release indicates a broader 'eviction moratorium', but we have seem similar wording previously used with the Regulations then dialled back to prevent eviction for non-payment of rent and outgoings only).

The 2021 Regulations allowed a ‘protection period’ from 28 July 2021 regardless of the timing of the tenant’s relief application (by way of example a tenant who made a relief application 14 January 2022 would be entitled to 1 day of rent relief, but their landlord would be prevented from acting in respect of unpaid rent from 28 July 2021 until a rent relief agreement was reached). One would hope the extended regulations do not continue to back-date the ‘protection period’ to 28 July 2021 and will apply protections only from the date the tenant will be eligible for relief.

We note the extended regulations are yet to be released. They can be expected to have retrospective effect. Landlords seeking to take steps adverse to tenants prior to the Regulations being released should tread carefully and should consider claims that may arise once the Regulations do land.

We’ll provide a further update once more information comes to hand - watch this space

In the meantime please don't hesitate to contact our office with any queries.

Paul Nunan

Director

Accredited Specialist | Commercial Leasing