Navigating Leases and the COVID-19 Outbreak – Part 8

On 20 August 2020, the Victorian Treasurer announced an extension to the existing rent relief scheme and some further measures to assist landlords and tenants.

The details of the existing rent relief scheme are housed in the COVID-19 Omnibus (Emergency Measures) Act 2020 (“the Omnibus Act”) and the COVID-19 Omnibus (Emergency Measures) (Commercial Leases and Licences) Regulations 2020 (“the Regulations”).

Among other things, the Omnibus Act and the Regulations sought to implement temporary measures to apply to tenants and landlords under certain eligible leases to mitigate the effect of measures taken in response to the COVID-19 pandemic, and to implement mechanisms to resolve disputes concerning eligible leases.

Amendments to the Omnibus Act were not unexpected, as the Omnibus Act automatically expires on 29 September 2020.

The proposed extension and amendment to the rent relief scheme are contained in the COVID19 Commercial and Residential Tenancies Legislation Amendment (Extension) Bill 2020 (“the Bill”) which was debated in the Victorian parliament last week.

Should the Bill pass, the Omnibus Act will be amended in the following ways:

  1. The operation of the commercial tenancy provisions of the Omnibus Act will be extended from 29 September 2020 to 26 April 2021.
    It is unclear at this stage whether the prohibitions on terminations extend to both termination for non-payment of rent and termination for not trading.
  2. To allow the definition of ‘eligible lease‘ under section 13 of the Omnibus Act to be prescribed by the Regulations.
  3. The Omnibus Act currently defines an ‘eligible lease’ to be a lease under which the tenant is an SME tenant and an employer who qualifies for and is a participant in the JobKeeper scheme.
    This amendment may address issues that have arisen around the requirement that a tenant be an employer, which has created difficulties for tenants who are sole traders and tenants who operate a service company, and the requirement that the tenant itself be a participant in JobKeeper, which can cause problems for tenants who use a service company.
    The Bill also allows the making of binding orders directing landlords under eligible leases to give or agree to give specified rent relief to tenants under eligible leases and conferring jurisdiction on VCAT to enforce such orders.

The Bill also seeks to make amendments to the Residential Tenancies Act 1997 (“the RT Act”), including:

  • The operation of Part 16 (COVID-19 temporary measures) is extended until:
    • 28 March 2021; or
    • if a later date is fixed by Governor in Council (being a date after 28 March 2021 and before 27 April 2021), that date.

Part 16 of the RT Act outlines the temporary provisions to apply for tenancy agreements, residency rights in rooming houses, residency rights in caravan parks, site agreements and Specialist Disability Accommodation (SDA) residency agreements during the COVID-19 pandemic.

We are closely monitoring these changes and will provide a further update once the amended Regulations are enacted.

Wisewould Mahony will continue to provide assistance to both our landlord and tenant clients with respect to lease negotiations.  If you require our assistance with these negotiations, or to prepare a Deed of Variation of Lease, or to refer a dispute to mediation if you are unable to reach an agreement, or advice in relation to the recent changes to the Acts and Legislation, please do not hesitate to contact any member of our leasing team.