The Victorian Small Business Commission (VSBC) is reassuring commercial tenants and their landlords that free support and advice will still be available after the state’s Commercial Tenancy Relief Scheme ends on January 15.

The scheme was aimed at shoring up rental relief for tenants with annual turnovers below $50 million who could prove they had taken a hit of 30% or more due to a pandemic-induced downturn in business.

But when it officially concludes, tenants impacted by the pandemic will no longer be entitled to specific rent relief provisions from landlords that are enshrined in the revised legislation.

Of course, tenants and landlords can continue negotiating suitable rental arrangements should a lessee still be experiencing problems with cash flow. Yet now the VSBC is again taking steps to remind tenants and landlords that where negotiations fail and agreements cannot be reached, either party can make a formal application to the commission for free help and advice.

This follows the VSBC being inundated last year with pleas for assistance: of the 19,000-plus enquiries made to the VSBC in the 12 months to October 2021, a “staggering” 5175 requests – 85% more than in 2020 – were for help to resolve disputes.

Overwhelmingly, enquiries were from small business tenants and landlords regarding covid-19 induced strains on their enterprises caused by lockdowns and other restrictions.

Many of the applications made for assistance with rent relief disputes under the Victorian Government’s Commercial Tenancy Relief Scheme involved cases where tenants had stopped paying rent, or in which a landlord was refusing to negotiate with an impacted tenant.

Queries regarding retail leases largely pertained to deciphering which party bore responsibility for repairs, maintenance, and other outgoings. A significant number of other issues involved suppliers who had not been paid, or, vice versa, where goods and services had not been provided.

About a third of last year’s enquiries were quickly resolved, mostly over the phone. Remaining cases progressed to mediation with an impartial VSBC mediator guiding proceedings.

“There has never been a greater need for small businesspeople to understand their rights and obligations and to know how to get support if they need it,” VSBC Commissioner Lynda McAlary-Smith said, adding that this support covered everything from needing help in a particular language to guidance on mental wellbeing.

NSW rent negotiation rights extended! 

NSW small businesses face a similar situation when the Retail and Other Commercial Leases (COVID-19) Regulation 2021 comes to an end this week.

However on Thursday January 13 the State government announced that rent negotiation rights had been extended to impacted tenants with an annual turnover less than $5 million for the period December 1 2021 to March 13 2022. The government website states: “The Regulation ensures that the economic impact of COVID-19 is shared by property owners and tenants. The protections in the Regulation, combined with the land tax concessions and the newly established Commercial Landlord Hardship Fund, will help limit the long economic damage of COVID-19 and maximise the number of businesses that can resume normal operation when public health orders are lifted.”

The NSW code was revised last year to assist renegotiation of leases in good faith and prevent landlords turfing out tenants whose businesses had suffered due to the pandemic and therefore their ability to pay rent. NSW landlords were required to offer tenants withs annual turnovers of up to $50 million and who qualified as ‘impacted lessees’ a proportionate reduction in rent based on their decline in turnover.

The reduction was to be a combination of rental waiver with at least 50% of the total reduction in effect between July 13 and January 13 PLUS a deferral of rent which had to be repaid over the balance of the lease term or at least 24 months – whichever was greater unless otherwise agreed.

Bede Haines, partner at leading Sydney law firm Holding Redlich, said the majority of tenants and landlords had by now become used to operating in the pandemic-driven environment.

“This whole process has been going on for so long that the way of transitioning out of the pandemic will present its own difficulties,” he said.

“Parties may still find themselves required to keep renegotiating leases. The whole aim has been to get landlords and tenants talking and by and large I think people have gotten used to it.”