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25.02.2022

News

Covid rent relief—update

With borders reopening, mask mandates being lifted and, dare we say it, Omicron passing its peak, commercial tenancy relief schemes around the states are expected to draw to a close. This may well see a notable increase of new and final rent relief requests where agreements have not yet been finalised. Here, our Real Estate team provides a round-up of where things sit across Victoria, New South Wales, and Queensland.


Victoria

In January 2022, the Victorian Government announced an extension of the commercial tenancy relief scheme which was reintroduced in July 2021 and set to end 15 January 2022. The extension provides rent relief and protections for commercial tenants and landlords experiencing hardship due to the ongoing pandemic through to 15 March 2022.

Like the previous schemes, the key focus of the extended scheme is to provide further financial relief and security for small businesses across Victoria. Unlike the previous schemes, the extended scheme no longer applies to medium businesses.

The key features of this new scheme include the following:

  • only applying to small businesses with an annual turnover of $10 million, compared to $50 million with the last scheme
  • extending the rent relief period from 15 January to 15 March 2022
  • compelling landlords to provide rent relief to eligible tenants in the same proportion as their reduction in turnover. Like the previous schemes, half the relief amount must be waived with the remainder deferred for payment after the end of the rent relief period
  • continuing the moratorium on evictions 
  • continuing the ban on rent increases.

Landlords should note the impact this amended regulation has on repayment of rent deferred under the 2020 and 2021 relief schemes. The January 2022 regulations allow tenants an extension until 16 March 2022 before they are required to start repaying deferred rent, for both the extended and previous schemes.


New South Wales

The New South Wales Government also extended the ‘prescribed period’ for its commercial tenancy relief scheme in January 2022. Due to expire 13 January 2022, the relief period will now expire 13 March 2022. 

The relief and protections provided to commercial tenants by the scheme remain the same. 

However, in line with Victoria, the maximum annual turnover test to qualify as an ‘impacted tenant’ has been reduced from $50 million to $5 million for tenants seeking relief from 31 November 2021 onwards. 

The time frame for commencing payment of deferred rent remains a date agreed by the parties, or the earlier of, the COVID-19 pandemic ending (as defined by the Australian Government) or the existing lease ending. 


Queensland

Despite various periods of lockdown in Queensland during 2021 and the significant shift to ‘work from home’ for the first few months of 2022 driven by the Omicron wave, Queensland has not mandated rent relief for commercial tenants since 31 December 2020. The COVID-19 Emergency Response and Other Legislation Amendment Act (Act) has continued to provide for access to dispute assistance and free mediation services for landlords and tenants still trying to reach agreement on mandated and voluntary rent relief. However, this service will expire on 30 April 2022. 

The next phase for Queensland landlords and tenants will be navigating payment of deferred rent debts, many of which will fall finally due in December this year, two years from the end of the last mandated rent relief period.


Authors

Kristy Dorney

Kristy Dorney

Partner

Brooke Bostock

Brooke Bostock

Special Counsel

Helen Wu

Helen Wu

Senior Associate

Contact McMahon Clarke

Brisbane
T +61 7 3239 2900
A Level 7, 100 Creek Street, Brisbane Qld 4000

Melbourne
T +61 3 9909 1400
A Level 2, 696 Bourke Street, Melbourne Vic 3000