Commercial Tenancy Relief Scheme – Reintroduced for Victoria & Rent Relief Extended for NSW Commercial Tenants

To ease the pressure on Victoria’s small and medium-sized businesses at this time, the Victorian Government has reintroduced the Commercial Tenancy Relief Scheme (the Scheme). The Scheme will help small and medium-sized businesses with an annual turnover of less than $50 million that have experienced a fall in turnover of more than 30 per cent during the coronavirus (COVID-19) pandemic.

The new Commercial Tenancy Relief Scheme will be retrospective and operate from July 28, 2021, to January 15, 2022, and affords protection to eligible leases that were in effect on 28 July 2021.

Eligibility for rent relief has also been broadened, with tenants now able to choose three consecutive months between 1 April and 30 September 2021 to compare to their turnover in the same three months in 2019.

Eligible SMEs will get financial relief in the form of a proportionate reduction in rent. For example, a business with a turnover of 40 per cent of pre-pandemic levels can only be charged 40 per cent of its rent. Of the balance, at least half must be waived, with the remainder to be deferred.

For tenants already repaying deferred rent or that have an existing agreement with the landlord arising from the first rent relief scheme, the existing deferred rent will be frozen until 15 January 2022, at which time the amount outstanding will be added to the amount deferred under the new rent relief scheme.


  • An eligible lease is a lease or commercial licence which was in effect on 28 July 2021, and where the tenant is an eligible tenant. Agricultural leases, or where the tenant is a listed company or subsidiary of such, are also not eligible.
  • An eligible tenant must be an SME entity (with less than $50 million annual turnover) which, on 28 July 2021:
  • Carried on a business in Australia (including not-for-profit); and
  • Satisfies the decline in turnover test.

Turnover calculation
An eligible tenant must have incurred a reduction in turnover of at least 30% or more, during the relevant turnover test period. Importantly, turnover now specifically includes any state government (but not Commonwealth) COVID grants and any turnover from online sales or other premises. This is a new aspect of the Regulations.

The turnover test period and comparison turnover will depend on the date the tenant started trading. A summary of the relevant periods are summarised by the Victorian Small Business Commissioner and can be downloaded here: CTRS-table-2_comparison-and-turnover-periods.

There are alternate comparison turnover tests for particular situations (e.g. business restructuring, business acquisitions or disposals which affected the tenant’s comparison turnover, or sole traders).

Period of rent relief
Tenants who request rent relief, and provide all evidence, on or by 30 September 2021 are entitled to rent relief for the whole of the protection period.

However, tenants requesting rent relief after 30 September 2021 are only entitled to rent relief starting from the date of their application until 15 January 2022.

How Do Tenants Apply for Rent Relief?
A request for rent relief must be made in writing and accompanied by a statement that the tenant is an eligible tenant and satisfies the decline in turnover test (including setting out working calculations) together with any other circumstances the tenant would like the landlord to consider. There is no prescribed list of ‘other circumstances’ or direction on how much weight is to be given to them.

Having made a request, a tenant must, within 14 days, provide information which evidences the turnover figures along with a statutory declaration stating that the information is true. Penalties apply for providing false or misleading information. The evidence can be at least one of:

  • Accounting records
  • Business Activity Statements
  • Bank statements; or
  • A statement prepared by a practicing accountant

If a tenant fails to provide such evidence within 14 days, the request will lapse. A tenant may make a further request, however if a tenant allows three (3) requests to lapse, the tenant cannot make a further request after that.

Landlords Obligations
On receipt of a tenant’s request and the necessary evidence, the landlord must offer rent relief within 14 days. The 2021 Regulations mirror the 2020 regulations in relation to what a landlord’s offer must contain (in proportion to the decline in turnover from the premises) at least half in waiver and the balance in deferral and an offer to extend the lease term.

The rent relief offer must relate to the rent relief period which is determined as follows:

  • if a tenant makes a compliant request and provides all evidence on or before 30 September 2021, the rent relief period will be 28 July 2021 to 15 January 2022; or
  • if a tenant makes a compliant request and provides all evidence on a date after 30 September 2021, the rent relief period will be from that date until 15 January 2022.

Unlike its 2020 predecessor, the 2021 Regulations contain a deeming provision. That is, where an agreement is not reached within 14 days of an offer being made, a tenant will be deemed to have accepted a landlord’s offer of relief if:

  • The landlord’s offer meets the requirements set out above; and
  • The tenant has not referred the matter to the Small Business Commissioner.

 Reassessment of rent relief agreement
Although eligibility for rent relief is determined by a one-time test, the regulations provide for a mandatory reassessment of rent relief as at October 31, 2021, for businesses that commenced trading prior to 1 April 2021 and which made a request for rent relief on or before 30 September 2021. The re-assessment is based on the tenant’s turnover for the quarter ended 30 September 2021.

If the reassessed turnover differs from the initial percentage decline, then from 31 October 2021, the rent relief agreement is deemed to have been adjusted to reflect the change in turnover until 15 January 2021.

Tenants who fail to do so may lose the benefit of any waived rent under their rent relief agreement on and from 31 October 2021 (other than for reasons of sickness, injury or natural disaster affecting trade). Any deferred rent must still be repaid by tenants as agreed.

Extension of the term
Like its 2020 predecessor, the 2021 Regulations provide that if the payment of any rent is deferred, the landlord must offer the tenant an extension to the term of the lease equivalent to the period for which rent is deferred.

Payment of deferred rent
A landlord must not request payment of any part of the deferred rent until after 15 January 2022. Interestingly, the 2021 Regulations also provide that if rent was deferred under an agreement made under the 2020 regulations, a landlord may not request payment of any part of that deferred rent until after 15 January 2022.

Payment of Rent, Trading and Rent Reviews
In a substantial change, any rent review that falls within the protection period is voided and may never be claimed. The rent review can no longer be deferred.

Protections Under the Scheme
A tenant under an eligible lease will receive protection from evictions for failure to pay rent or outgoings in the protection period but only:

  • if the tenant has made a compliant request and continues to pay the portion of rent due reduced by the same percentage as the tenant’s decline in turnover; or
  • if a rent relief agreement has been reached, the tenant has paid rent and outgoings in accordance with that rent relief agreement.

There are some exceptions for sickness, injury or natural disaster preventing trade.

This is a marked difference from the 2020 regulations which afforded a tenant protection against eviction during the rent relief period regardless of whether or not the tenant paid the rent and outgoings.

A tenant under an eligible lease may reduce or cease trade during the protection period without breaching the lease. In another departure from the 2020 regulations, a tenant need not satisfy the decline in turnover test to qualify for this protection.

What if You Cannot Reach an Agreement?
The dispute resolution process works much in the same way as it did under the 2020 regulations. The ability of the Small Business Commission to issue a binding order is repeated, but only applies in limited circumstances and only a tenant can seek a binding order. There is no ability for a landlord to seek a binding order from the Small Business Commission.

The Victorian Civil and Administrative Tribunal continues to have power to determine disputes under the 2021 Regulations. In making an order in a proceeding relating to an eligible lease dispute, the Tribunal may have regard to (amongst other things) any evidence of the conduct of the landlord and the tenant with respect to any rent relief under the 2020 regulations.

The 2021 Regulations otherwise confirm the previous position that the landlord and tenant must co-operate, act reasonably and in good faith.

The Victorian Small Business Commissioner will support tenants and landlords with information to negotiate an agreement and free mediation for those who need assistance.

Support for Landlords
Landlords found to be doing the right thing by tenants will not be left out in the cold either; land tax relief of up to 25 per cent will be provided by the Victorian Government, in addition to any previous relief, with the support worth up to $100 million.

Further, small landlords who can demonstrate acute hardship will be eligible to apply for payments as part of a $20 million hardship fund.

NSW Extends Commercial Tenancy Relief
Commercial landlords in New South Wales will now be required to offer rental relief to tenants with an annual turnover less than $50 million under an extended state support scheme.

The NSW government last week announced the reintroduction of national cabinet’s Mandatory Code of Conduct for Commercial Leasing, which will mandate rent relief for eligible tenants hit hard by COVID-19 until at least 13 January 2022.

Under the extension of the Retail and Other Commercial Leases Regulation (COVID-19) 2021, which was due to expire on 20 August, landlords will be required by law to renegotiate rent with their tenants in step with the national cabinet’s mandatory Code of Conduct.

The same regulation previously only required the state’s commercial landlords to attempt mediation before evicting or locking out tenants.

Now, however, landlords will be required to offer rent relief in proportion with a tenant’s decline in turnover, at least half of which must be offered as a waiver, and enter rent renegotiations before moving to evict or lock their tenants out.

The extended regulation will apply to commercial and retail tenants with a turnover of up to $50 million who meet eligibility criteria for either the COVID-19 micro-business grant, COVID-19 Business Grant or JobSaver Payment. The mandated rent relief will also be accompanied by a new $40 million Hardship Fund, which will offer monthly grants of up to $3,000 for small commercial or retail landlords who have waived rent of at least the same value, along with any land tax relief they’re eligible for.

Should you have any questions or need any help to ensure you receive all available assistance, please reach out to our team at Rose Partners and we will do our best to assist.

Stay safe.

The Team at Rose Partners

Back to all posts

It’s time to feel confident about where your business is heading.

Become a success story

Get all rose partners news

Get all rose partners news