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August 20, 2020

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What did we learn from today’s announcements?

The Premier’s press release today contained some important information about the CTRS for commercial landlords and tenants.  

Here is my summary of and comments on the latest development:

  • The prohibition on lease terminations and rent increases will be extended from the current sunset date of 29 September 2020 to 31 December 2020.  It is unclear at this stage whether the prohibition on terminations extends to both termination for non-payment of rent and termination for not trading, but it is likely to cover both.
  • The prohibition will not apply in ‘specific circumstances’. That seems to be new and at this stage it is not clear what those circumstances will be.
  • Importantly, the press release said nothing about whether the landlords’ requirement to provide rent relief will also be extended.  We will need to wait to hear more on this issue.
  • The Victorian Regulations giving effect to the Code have been criticised by tenants for ‘de-coupling’ rent relief from the tenant’s reduction in turnover and emphasising both the tenant’s ability to pay rent and the landlord’s ability to absorb rent relief.  The press release suggests an increased emphasis on, or ‘re-coupling’ of, rent relief to the reduction in tenant’s turnover.  It is not clear at this stage what that ‘re-coupling’ will look like.
  • The Victorian Small Business Commission ‘will now also have greater capacity to make an order on rent relief if a landlord refuses to respond to rent relief requests.’  One of the areas of uncertainty in the Victorian Regulations is what power the Courts or VCAT have resolve requests for rent relief that do not settle at mediation.  This announcement suggests that the VSBC will have some kind of power to make an order for rent relief.  This is new, as the VSBC does not have such a power under the current version of the Regulations.  Again, it is not clear how this power will operate or in what circumstances.
  • There will be increased land tax relief and funding for commercial landlords – up to $3,000 per tenancy – and eligible small businesses that own commercial property will be able to benefit from land tax relief.

The announcement coincides with at least one major landlord moving to terminate leases for some non-paying, non-SME tenants: see https://www.theage.com.au/business/companies/westfield-locks-retailers-out-of-stores-as-rent-battle-escalates-20200820-p55ns2.html

As usual, I will post any further information about amendments to the CTRS as soon as it comes to hand.

August 20, 2020

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Premier’s press release on the (partial) extension of the CTRS

https://www.premier.vic.gov.au/pause-evictions-extended-and-extra-renter-protections

The above link is to the Premier’s press release on what appears to be a partial extension of the CTRS.

The press release contains more information than was in the article that I posted earlier today.

I will circulate a summary of the key points shortly.

August 20, 2020

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Announcement about extension of the CTRS in Victoria

The Financial Review has just published the following:

Ban on rent increases and evictions extended

Patrick Durkin

The Victorian government is extending the ban on evictions and rental increases until the end of the year.

“Under the extensions, evictions will continue to be banned for residential and commercial tenants until December 31, unless in rare and specific circumstances,” Victorian Treasurer Tim Pallasa said.

“Rental hikes continue to be banned until the end of the year also,” he said.

Mr Pallas said in the last four months, there had been close to 26,000 agreements for reduced rent registered with Consumer Affairs Victoria.

The Victorian Small Business Commission has also helped around 8,000 rent-related inquiries.

“Most of those have been help that has been brokered to find common ground between tenants and landlords,” Mr Pallas said.

The state Treasurer said the government is also introducing additional measures with commercial landlords required to provide rent relief in proportion with falls in turnover.

“So, up until now, that proportionality principle has been aspired to, but we will now make it a very clear and expressed intention that, if you’re identifying a downturn in your capacity, your turnover, then you should have an expectation that that is similarly reflected in terms of the rent relief that you get,” Mr Pallas said.

“Residential and commercial landlords will be able to take more advantage of more support, including, for example, further land tax reductions and more grant funding. The government’s also going to extend the land tax relief available and make it easier to access,” he said.

Landlords that provide outright rent waivers of at least 50 per cent of rent payable for at least three months will be eligible for an additional 25 per cent land tax relief.

A $60 million fund will also be established for eligible small commercial landlords, and that will provide up to $3,000 per tenancy.

Additionally, the government will invest some $600,000 in a package to support advocacy groups such as VCOSS, Tenants Victoria, and others, to support vulnerable tenants to understand their rights.

August 5, 2020

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Details of Stage 4 Lockdown Part 2 – contact details for the Industry Coordination Centre

Further to my post on Monday about the details of the stage 4 restrictions, contact telephone number and website for Industry Coordination Centre within Department of Jobs, Precincts and Regions are 13 22 15 or visit Business Victoria.

Further details can be found at  https://djpr.vic.gov.au/about-us/contact-us.

August 4, 2020

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Stage 4 lockdown social distancing gazette entry

Readers might also be interested in the Victorian Government Gazette entry for stage 4 social distancing rules.

This is the Gazette entry for the social distancing measures that were announced by the Premier on Sunday (ie stage 4 social distancing, 5km rule, etc), not the Gazette entry that records yesterday’s announcement of business closures.

I expect that the Gazette entry for business closures will be published either today or tomorrow and I will post a copy as soon as I see it.

Stage 4 lockdown gazette entry – social distancing

Thanks to my friend and colleague Peter Lowenstern for forwarding this to me.

August 3, 2020

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Details about stage 4 lockdowns

The main issue that comes out of today’s announcements is the question of which industries must close, which can open and which can continue with restricted operations.

For those trying to work this out, you might want to have a look at this link to the Premier’s website that contains:

  1. the Premier’s press statement on business restrictions;  and 
  2. a link to a table detailing the restrictions (a copy of which is available by clicking on the button below).
Stage 4 lockdown table

The table contains a detailed list of the restrictions that apply to each industry and then to each sector within the industry.  However, I suggest that you read the Premier’s statement first, then review the table.

Practitioners should also be aware that the Government has set up an Industry Coordination Centre within the Department of Jobs, Precincts and Regions to consider cases that do not fit neatly into the categories in the Premier’s three list and the attached table.  I couldn’t find reference to the Centre on the website for the Department of Jobs, Precincts and Regions, but I expect that it will go up in the next day or so.  Please send me a link or post it in the comments section below if you find it.

Some extracts of the Premier’s statement relevant to leasing lawyers are as follows (emphasis added):

Today I can announce three lists that will apply during Stage 4 restrictions.

First: supermarkets, grocery stores, bottle shops, pharmacies, petrol stations, banks, newsagencies, post offices —plus everyone involved in our frontline response — will continue to operate.

Second: Industries where onsite operations will have to cease for the next six weeks including retail, some manufacturing and administration. These businesses will all need to close by 11:59pm Wednesday 5 August, unless they have specific circumstances that mean they need longer to shutdown safely.

Retail stores will be permitted to operate contactless ‘click and collect’ and delivery services with strict safety protocols in place, and hardware stores can remain open onsite, but for tradespeople only.

The third and final list is made up of industries that are permitted to operate — but under significantly different conditions.

…

All open businesses and services will have until 11:59pm Friday 7 August to enact a COVIDSafe plan focused on safety, prevention and response in the event that coronavirus is linked to the workplace — because beating this virus requires a rapid response wherever it rears its head.

In industries that can’t close, but where we’ve seen a number of cases or emerging new risks, we’ll be making some big changes to make these workplaces safer — for workers and for their families.

That includes mandated reductions to the number of workers onsite. In the meat industry — and based on the minimum required to operate safely onsite — the workforce will be scaled back to two-thirds. Unlike other changes, and recognising the risk these sites have posed here and around the world, this will apply to abattoirs in Melbourne and across the state.

Warehousing and distribution centres in Melbourne will be limited to no more than two-thirds the normal workforce allowed onsite at any one time.

Our construction sector, the lifeblood of our economy, will also move to pilot light levels. This will allow the industry to keep ticking — while also making sure we limit the number of people onsite.

For major construction sites, that means the absolute minimum required for safety — but no more than 25 per cent of the normal workforce onsite. Small-scale construction will be limited to a maximum of five people onsite.

These workplaces that are continuing to operate will also have additional requirements including extra PPE, staggering shifts, staggering breaks, health declarations and more support for sick workers to ensure they stay home.

…And for those businesses and industries that fall into grey areas when it comes to their operation, the dedicated Industry Coordination Centre within the Department of Jobs, Precincts and Regions will consider their cas

August 3, 2020

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Lockdown Mark 2, stage 4 and the CTRS

In 48 hours of announcements that just seemed to get worse and worse, the ever-diligent young property barrister Callum Dawlings caught the Premier’s only reference to the CTRS in light of Lockdown Mark 2.  

In answer to a question about the Government’s tenancy protections, the Premier was heard to say:

‘We will have more to say about tenancies soon.’

So you should expect to hear something soon. Watch this space and I will post anything I hear about changes to the CTRS as soon as it comes to hand.

July 19, 2020

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Lockdown mark 2 …

Hi all and welcome to lockdown mark 2.

I am not yet aware of any new measures for landlords and tenants coming out of the second wave of this awful pandemic.  Practitioners already operating in this area should be familiar by now with the basic layout of the Commercial Tenancy Relief Scheme and the materials that are available.

However, with the new lockdowns there are likely to be more tenants seeking rent relief and more practitioners being asked to help their clients through this process.

As a reminder for those already practicing in the area, and to assist those who are just entering the fray, the basic materials consist of:

  1. The National Cabinet Mandatory Code of Conduct.
  2. Part 2.2 of the COVID-19 Omnibus (Emergency Measures) Act 2020 (Vic).
  3. The COVID-19 Omnibus (Emergency Measures) (Commercial Leases and Licences) Regulations 2020 (Vic).
  4. The Ministerial policy guideline titled Victoria’s commercial tenancies relief scheme: Policy guidance on eligible participants and documentation requirements.
  5. The Office of the Small Business Commission’s FAQ’s, which are being regularly updated as the situation evolves.

Also, a link to a CPD and paper that I presented to the LIV outlining the scheme and some of the issues associated with it is available here.

This blog is Victorian-based, so takes a Victorian perspective on these issues.  However, the lawyers at Minter Ellison have published an excellent compendium of Victorian and  interstate legislation that gives effect to the Code, available here.

There is only one part of the Regulations that I want to highlight at this stage, and that’s reg 11, which states that:

(1)  If the financial circumstances of a tenant under an eligible lease materially change after a variation to the eligible lease has been made or an agreement has been reached as mentioned in regulation 10(6)—

(a)  the tenant may make a further request to the landlord under that lease for rent relief under regulation 10;  and

(b)  subject to subregulation (2), the landlord and the tenant must follow the process set out in regulation 10 in relation to that request.

(2)  A landlord’s offer of rent relief need not comply with regulation 10(4)(b).

Note

An eligible lease has effect subject to this regulation—see section 17(1) of the Act.

The upshot is that:

  1. a tenant who has already reached agreement about rent relief with their landlord can start the process again and request more rent relief if their financial circumstances materially change;
  2. the process is the same as previously, save that the landlord is not required under regulation 10(4)(b) to provide a minimum level of rent relief by way of waiver, suggesting that further deferrals are expected (if warranted in the circumstances);  and
  3. the Regulations do not provide any guidance on what is a ‘material change’ in the tenant’s financial circumstances.  Practitioners should expect to hear more about this in the coming weeks.

As usual, I will try to update everyone on developments as they occur.

June 19, 2020

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Retail Leases Amendment Bill 2019 passed though the lower house and tabled before the upper house

Remember the Retail Leases Act 2003 (Vic)?  We used to talk about it a lot in the good old days …

… anyway, reminiscing aside, in a welcome break from all things COVID-19 in the world of commercial and retail tenancies, the Retail Leases Amendment Bill 2019 (Vic) passed the lower house of Victorian Parliament on 4 June 2020 and was introduced into the upper house on the same day.

I am reliably informed that the bill has been tabled for debate in the upper house over the last few days, but is yet to be reached.

To refresh your memories, the Bill is intended to amend the RLA 2003 as follows:

(i)  to clarify the obligations of landlords and tenants under retail premises leases in respect of essential safety measures; and

(ii)  to require landlords to give information to tenants under retail premises leases in a more timely manner; and

(iii)  to clarify the timeframe within which landlords must return security deposits to tenants under retail premises leases; and

(iv)  to create a new early rent review process for tenants under retail premises leases; and

(v)  to establish a cooling off period for the renewal of retail premises leases in certain circumstances.

For further discussion, refer to my earlier post here: https://samhopperbarrister.com/2019/10/30/retail-leases-amendment-bill-2019-tabled-before-parliament/ 

For the real lease-nerds:

Thanks to Peter Lowenstern for letting me know of the Bill’s progress.

June 19, 2020

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Webinar: The Impact of COVID-19 on the Legal Obligations of Parties in Property Transactions

On 2 June 2020 I presented a seminar on the Code, the Act and the Regulations for the LIV that has been made available to subscribers to this blog.

My colleague David Lloyd also spoke about the impact of COVID-19 on other real estate transactions, so you guys might be interested that too.

I have attached a link to the video stream and attached a copy of the materials from the presentation as well.

Unfortunately, something went wrong with the first 10 minutes or so of recording.  If you want to watch the presentation, I suggest that you read some of my materials first.  My note start at p 12 of the attached materials and my presentation follows the order of those notes.  The video stream starts when I am at around paragraph 9(d), so I suggest you read paragraphs 1 to 9(d) or so before you start watching the video so that you have some idea of the parts of the presentation that are missed from the recording. (I have highlighted paras 1 to 9(d) in the copy of the materials below to make it easier for you.)

The video stream is available here:

The Impact of COVID-19 on the Legal Obligations of Parties in Property Transactions

Password: LIVCPDP2020!

The materials are here: Materials LIV CPD 2 June 2020

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