New COVID-19 Rent Relief Measures for Victoria and NSW – Real Estate and Construction

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Australia: New COVID-19 Rent Relief Measures for Victoria and NSW

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COVID-19 closures in Victoria and New South Wales have had a significant impact on businesses. To ease rent for commercial tenants, new laws have been introduced in New South Wales and Victoria to help affected businesses. This article will describe:

  • key dates and eligibility criteria for tenants and leases in Victoria and New South Wales;
  • relief available; and
  • prohibited actions of owners.

Changes in Victoria

The Commercial Rent Relief Scheme Regulations 2021 have been implemented to provide relief from July 28, 2021 to January 15, 2022. The relief period may be extended, subject to government notice.

Eligibility

As a tenant, you may be entitled to relief if you are:

  • an entity which, on July 28, 2021:
    • carried on business in Australia;
    • was a non-profit organization pursuing goals in Australia;
    • was the beneficiary of a deductible gift; Where
    • operated a public fund covered by the settlement;
  • an SME entity; and
  • meet the criterion for declining turnover (set out below); and
  • are not an excluded tenant (shown below).

Decrease in turnover test

You will pass the revenue decline test if:

  1. your revenue for the Revenue Test Period (defined below) is less than your Comparison Revenue (defined below); and
  2. the above shortfall is not less than 30% (15% for an ACNC registered charity or school that requires a 15% drop).

The Turnover Test Period means:

  • if you trade before April 1, 2021, you can choose a consecutive 3 month period for the rotation test to apply; Where
  • you were in business on or after April 1, 2021, then you and the owner must agree (in good faith) on the period of 3 to 3 months for the revenue test to apply.

The Relevant Comparison Period is the three-month period in 2019 corresponding to the 3-month period chosen by you.

The comparison revenue period is your revenue for the relevant comparison period or, if another comparison period applies to you, as calculated.

Excluded tenant

An excluded tenant is a tenant specified under the regulation which includes:

  • an Australian entity or local governing body; and
  • a listed company, a legal person listed on a stock exchange outside Australia and a grant from a listed company or legal person.

Relief available

The planned relief must:

  • relate to up to 100% of the rent payable under the qualifying lease during the rent relief period;
  • be at least proportional to the decrease in the tenant’s turnover;
  • at least 50% of the relief offered must be in the form of rent exemption; and
  • take into account the circumstances raised by you and the partial payments made by you.

REMARK: 15 days after you have received an offer for rent relief, it may be considered accepted if a rent relief agreement has not been concluded, has not been submitted to the Commissioner for Small Businesses, and the relief is consistent with the above.

Execution action prohibited

If you are an eligible tenant and you have taken the following actions, your landlord is prohibited from taking certain actions against you. These include if you:

  • you have requested rent relief from the landlord and you continue to pay a portion of the rent due, equal to the rent due, reduced by the same percentage as your decrease in turnover; Where
  • if a rent relief payment has been made and you are making the payment in accordance with this agreement; Where
  • if you are unable to trade due to illness, injury or natural disaster affecting the premises.

The landlord cannot increase your rent based on turnover, or take the following actions for non-payment of rent, expenses, or reduced hours of operation, including:

  • expel or attempt to expel;
  • return to or otherwise recover the premises; Where
  • have recourse to security.

Additionally, a homeowner should consider forgoing the recovery of any outgoing or other expense payable. If expenses are charged, it must not be for an amount greater than your proportionate share of reduced expenses (if already paid, this must be reimbursed by the owner).

Changes in New South Wales

New South Wales (New South Wales) The government introduced the COVID-19 Law Amendments (Emergency Measures) Act, 2020 to provide relief to qualifying tenants. Likewise, the Retail and Other Commercial Leases Regulations (COVID-19) 2021 (the Regulation) has been extended until January 13, 2022. This regulation gives priority to mediation and prohibits owners from taking certain actions, including:

  • the eviction or termination of their tenant’s lease;
  • exercise a right of re-entry or possession; Where
  • recover the premises or the land, among others.

In addition, the regulation re-establishes the obligation for landlords to negotiate rent in accordance with the code of conduct for national cabinets. The Code requires:

  • that landlords grant rent relief proportional to the decrease in tenants’ turnover; and
  • of the expected rent relief, at least 50% must take the form of a waiver and the balance a deferral.

Eligibility

As a commercial or retail tenant, you may be eligible for relief if you:

  • have an annual turnover of up to $ 50 million in the 2020-2021 fiscal year; and
  • are eligible for the COVID-19 Micro-Business Support Grant, the NSW COVID-19 Business Grant, or the Job Saver Grant.

Relief available

There is relief available for homeowners. Eligible landlords can receive up to 100% liability reduction for 2021. To be eligible, landlords must rent to a commercial tenant who has:

  • annual sales of up to $ 50 million; and
  • is eligible for the COVID-19 2021 Business Grant, JobSaver, or the COVID-19 Micro-Business Grant.

In addition, a $ 40 million hardship fund is now available, offering a monthly grant of up to $ 3,000 to small business or retail owners who offer lease waivers.

Prohibited actions by owners

If you are an eligible tenant, your landlord cannot increase rent based on sales or take default actions to:

  • non-payment of rent or expenses; Where
  • not keep the premises open during the hours specified in the lease;

if renegotiation of the rent or mediation has not been attempted beforehand.

Prescribed actions include:

  • the eviction or termination of a tenant’s lease;
  • exercise a right of re-entry or possession;
  • recover the premises or the land;
  • require seizure of goods (i.e. seize goods);
  • demand confiscation;
  • claim damages;
  • demand payment of interest or any fees or charges relating to the unpaid rent;
  • recover a bond; Where
  • request the performance of the obligations under the lease.

Key points to remember

As a commercial or retail tenant, it’s essential to negotiate with your landlord and make sure you get any qualifying rental relief. Your landlord has obligations that he must respect and the law prohibits him from taking certain actions, such as terminating your lease or reclaiming the premises.

If you have questions about your rights to COVID-19 rental relief, LegalVision’s experienced leasing lawyers can help. Call us at 1 800 534 315 or complete the form on this page.

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