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The Rent Relief Regulation 2021

The Commercial Tenancy Relief Scheme Regulations have been enacted recently. In this article, we will outline the requirements for applying for rent relief.

The Regulation is effective from 28 July 2021 to 15 January 2022.

The first requirement is that the lease needs to be an eligible lease, which means the lease needs to be legally valid on or before 28 July 2021. If the lease is renewed, varied or extended after 28 July, it is also considered valid if the basic terms of the lease are substantially similar.

Secondly, the tenant must meet the corresponding conditions, including but not limited to:

  1. the tenant must not be a public company or engaged in the business of agriculture, farming, etc;
  2. the tenant’s annual turnover does not exceed A$50 million;
  3. The tenant’s turnover must have declined by at least 30%.

The period used to calculate the percentage of reduction in turnover will be determined by when the business started trading. For example, if a business started trading before 1 April 2019, renters can have the option to choose between any three (3)_consecutive months between 1 April 2021 and 30 September 2021, (e.g. March, April, and May) and compare that with the same months in 2019. For businesses that started trading after 1 April 2019, an alternative comparison method will apply.

Please note that the application for rent relief must be submitted in writing, and the tenant must indicate the following in the application:

  1. the tenant is an eligible tenant.
  2. the tenant’s turnover must have decreased by at least 30%; and
  3. the tenant may also list additional factors that the tenant would like the landlord to consider.

Within 14 days of submitting the application, the tenant will need to provide evidence to support the application. An additional statutory declaration must be provided to prove that all evidence provided is true.

If the tenant fails to provide evidence within 14 days, the application will lapse. Tenants have three opportunities to apply, if the application lapses more than 3 times, the tenant will not be able to apply for rent relief again.

 

After the application has been submitted and relevant evidence provided, the landlord must within 14 days offer the tenant rent relief in writing, and must:

  1. provide rent relief proportional to the percentage of the tenant’s decrease in turnover, e.g. if the tenant’s turnover decreased by 30% the landlord must offer 30% rent relief, out of which at least 15% must be waived, and the remainder is deferred.
  2. consider the other factors which the tenant wants the landlord to consider.

Please note that if the tenant applies for rent relief (and provides evidence) on or before 30 September 2021, the tenant may seek rent relief for the period between 28 July 2021 and 15 January 2022. However, if the tenant applies for rent relief and provides evidence after 30 September 2021, the tenant will only be eligible to receive rent relief for the period between the date of the tenant’s request and 15 January 2022. Therefore, if the tenant makes the application and provides evidence on October 1, the tenant will effectively lose more than 9 weeks of rent relief.

Further, if any rent is deferred, the deferred rent will be paid by equal instalments in the next two years or the remaining term of the lease (whichever is longer), commencing no earlier than 15 January 2022.

 

Please note that if the tenant is not satisfied with the landlord’s offer which was compliant with the minimum requirements and that the tenant  has not referred the matter to the Small Business Commissioner for assistance within 14 days of such offer, the tenant will be deemed to have accepted the landlord’s offer.

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