COVID-19 Rent Relief Regulations are now in place
The Commercial Leases and Licences Regulations ( the Regulations ) have now come into force and will be applied with retrospective effect from 29 March 2020 and continue until 29 September 2020.
These Regulations provide the guidelines for landlords and tenants to deal with rent relief for those impacted by the COVID-19 pandemic. |
Who is impacted by the Regulations?Only eligible leases are subject to the Regulations, and we have explained the concept of an eligible lease in a previous Tax Alert – click here .
Basically, a tenant needs to be eligible for (and take up) the JobKeeper Payment scheme, however we note that some types of leases are excluded.
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What do the Regulations stipulate?A requirement for tenants to make a formal request for rent relief in writing and the tenant confirming with the landlord that the lease is an "eligible lease" under the Regulations:
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How do the Regulations interact with Land Tax Relief?Landlords that have provided rent relief to a tenant, under these "eligible lease" Regulations, may apply to the Victorian State Revenue Office ( SRO ) for a land tax discount of 25% and potentially the ability to defer the remainder of their land tax liability until 31 March 2021. We have explained how to make this claim with the SRO in a previous Tax Alert – click here .
Land tax relief may be available to landlords who cannot find a tenant because of the economic downturn caused by the COVID-19 pandemic.
We recommend that landlords carefully consider your eligibility for land tax relief before incorporating this into any agreement with a tenant, as not all landlords will be able to obtain the land tax discount of 25%. |
Seeking Advice when Negotiating rent relief and Detailed DocumentationWe note it is important before any agreement for rent relief is reached, you seek professional advice to ensure you have received sufficient information about the financial status of your tenant and considered all available information/guidelines which may impact the how (and when) your premises can be used as COVID-19 restrictions are lifted.
It is important that all negotiations leading up to any rent relief agreement be properly and carefully documented. This may help mitigate the possibility of a tenant potentially taking legal action against their landlord in the future.
It is critical that any variation of the lease be prepared and documented by your normal legal advisers , for the following reasons:
It will give clearly defined terms of the rent relief agreement for any new tenant or successor landlord who purchases the property before the rent relief is repaid.
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Please do not hesitate to contact your Lowe Lippmann Relationship Partner if you wish to discuss any of these matters further. |
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