Rent Relief for Commercial Tenants

Legislation reintroducing the Commercial Tenancy Relief Scheme has now been passed in Parliament.

This means businesses that have experienced a loss in turnover of more than 30 percent during the pandemic are now guaranteed to receive rent reductions.

The Scheme is broadly based on the previous Commercial Tenancy Relief Scheme, introduced in 2020 with the objective of supporting tenants and landlords to negotiate in good faith to reach an agreement on rent relief in a timely manner.

Under the new Scheme, rent relief for eligible tenants is available if the drop in turnover is greater than 30 percent, which is calculated by comparing turnover for the final quarter of the 2020/21 financial year with turnover from the final quarter of 2018/19. The percentage drop will also determine the amount of initial rent relief available.

The Scheme makes it a requirement for commercial landlords to provide rent relief that matches their tenants’ fall in turnover in response to coronavirus (COVID-19), where the tenant is eligible for this support.

For example, if a business has a turnover that’s 40 percent of pre-pandemic levels, the business owner can only be required to pay 40 percent of their rent. Of the balance, at least half must be waived with the remainder deferred.

To support landlords who provide rent relief to their tenants, the Victorian Government will create an $80 million Landlord Hardship Fund.

Eligibility for the Commercial Tenancy Relief Scheme will be a one-time test. Businesses which are eligible at the beginning of the scheme will remain eligible throughout, with the proportion of rent relief adjusted in line with their turnover. A mandatory reassessment of turnover further into the new scheme will support fair treatment for all parties. 

The Scheme’s protection measures, which will include tenant protections against eviction, will be backdated to start from the commencement date of the Scheme, 29 July 2021. 

Tenants and landlords are encouraged to enter negotiations as soon as possible, with the aim of reaching a fair rent relief agreement.

Where a rent relief agreement can’t be reached or if a tenant or landlord can’t get a response from the other party, the Victorian Small Business Commission is available to provide free and impartial mediation to help parties reach a fair agreement.

For more information about the Scheme, read the Victorian Government’s FAQs.

Or for specific enquiries, tenants and landlords can contact the Victorian Small Business Commission on 13 87 22 or visit their website.