On 1 May 2020, the Victorian Governor made the COVID-19 Omnibus (Emergency Measures) (Commercial Leases and Licences) Regulations 2020 (“Regulations”). These Regulations are retrospective in nature, effective from 29 March 2020 and will remain in effect now until 31 December 2020. These Regulations govern the rights and obligations of commercial landlords and tenants in relation to the existing leasing principles in order to address the impact of the COVID-19 pandemic.
These Regulations ban evictions and rental increases for eligible leases to give tenants “certainty and security they won’t lose their home or workplace during the pandemic”.
An eligible lease under the Regulations must have the following features:
- a retail lease under the Retail Leases Act 2003 (Vic) or a lease or licence under which the premises are let or licensed for the sole or predominant purpose of carrying on a business at the premises;
- the tenant must be an SME Entity;
- the tenant has an annual turnover of less than $50 million in the previous financial year or anticipates and an annual turnover of less than $50 million in the current financial year;
- the tenant must qualify for and is a participant in, the JobKeeper scheme; and
- the Lease must have been in effect as of 29 March 2020.
The Regulations have defined turnover as the following amounts:
- the proceeds of sale of goods and/or services;
- commission income;
- repair and service income;
- rents, leasing and hiring income;
- Government bounties and subsidies;
- interest, royalties and dividends; and
- other operating income.
The Regulations provide for general obligations to be complied with on both landlords and tenants. A landlord and a tenant must “cooperate and act reasonably and in good faith in
all discussions and actions associated with matters to which these Regulations apply”. This is to include negotiations surrounding rent relief, an extension of the term, recovery of outgoings and payment of deferred rent.
ASAP Lawyers are happy to assist you in understanding your rights and obligations under your lease or licence. Please contact us if we can be of assistance with the negotiation process or in drafting agreements to reflect rent relief arrangements.