Introduction
The Commercial Tenancy Relief Scheme Regulations 2022 (Vic) (the 2022 Regulations) were made on 1 February 2022 pursuant to section 7 of the Commercial Tenancy Relief Scheme Act 2021 (Vic) (the CTRS).
The 2022 Regulations operate on and from 16 January 2022, being the date on which the Commercial Tenancy Relief Scheme Regulations 2021 (Vic) (the 2021 Regulations) expired. The 2022 Regulations will be revoked on 15 March 2022.
You may recall our previous article on the 2021 Regulations (please click here to access that article). The 2022 Regulations are very similar to the 2021 Regulations. In this article, we highlight the key differences between the 2022 Regulations and the 2021 Regulations.
Eligibility- Leases
The 2022 Regulations apply to commercial leases or licenses in effect on 16 January 2022 (see Regulation 5(1)). This will therefore capture a number of new leases and licenses that were not previously within the ambit of the 2021 Regulations.
Eligibility- Small Entity
The 2022 Regulations only apply to tenants who have an annual turnover during the 2021/22 financial year of less than $10 million (see Regulations 10(1)(c) and 11). This figure has been significantly reduced from the $50 million threshold prescribed in the 2021 Regulations.
Decline in Turnover Test
The decline in turnover test prescribed by the 2022 Regulations operates in the same way as it did under the 2021 Regulations, in that the decline in turnover test will be satisfied if the tenant’s turnover for the turnover test period is at least 30% lower (15% lower for registered charities and schools) than the tenant’s comparison turnover (see Regulation 13).
However, there have been some notable changes to the meaning of turnover test period under the 2022 Regulations. The table below outlines the turnover test period and comparison turnover applicable under the 2022 Regulations (see Regulations 14 and 15):
| Turnover test period | Comparison turnover |
|---|---|
| January 2022. | January 2020. |
| December 2021 if during the relevant comparison period a tenant's business ceased trading for a week or more due to an event or circumstances out of the tenant's control and the tenant's business resumed trading before 16 January 2022. | December 2019. |
If a tenant began trading on or after 1 January 2020, the comparison turnover will be the sum of the turnover for each month after the tenant started trading up to 31 January 2022, divided by the whole number of months of trade (see Regulation 16).
Timing for request for relief
The 2022 Regulations are silent on a time by which a tenant must submit a request for rent relief. Instead, a tenant’s rent relief period will be taken to have commenced on 16 January 2022 provided that the tenant submits a compliant request for rent relief to their landlord (see Regulation 26).
Mandatory reassessment of rent relief
The 2022 Regulations do not impose a requirement to reassess a rent relief agreement, which was required under the 2021 Regulations.
Rent relief period
The 2022 Regulations extend the rent relief period so that it covers the period from 16 January 2022 to 15 March 2022 (see Regulation 26). This means that a tenant under an eligible lease that makes a compliant request for rent relief under the 2022 Regulations will be eligible for rent relief during the entire rent relief period. This rent relief will be backdated to 16 January 2022.
Deferred rent
Any deferred rent under a rent relief agreement (including a rent relief agreement entered into pursuant to the 2021 Regulations and the COVID-19 Omnibus (Emergency Measures) (Commercial Leases and Licences) Regulations 2020 (Vic)) is further deferred (i.e. not payable) until 16 March 2022, unless the landlord and tenant otherwise agree in writing (see Regulation 29(2)(a)).
Closing remarks
The 2022 Regulations are similar to the 2021 Regulations in the way they operate, save for some key differences which we have outlined in this article. Both landlords and tenants should be mindful of their respective rights and obligations under the 2022 Regulations.
If you would like any further advice in relation to the 2022 Regulations, please do not hesitate to contact us.
This article is written by Matthew Powell, Partner, Natalie Gnoato, Associate and Ava Argiropoulos, Solicitor.
