The Victorian Government introduced the ability for commercial tenants to request rent reductions in the form of waivers and deferrals for the period between 28 July 2021 and 15 January 2022 under the Commercial Tenancy Relief Scheme (CTRS). This is likely creating further challenges for commercial landlords on the back of the moratoriums that were in place throughout 2020 and 2021.
What is available for commercial landlords to ease the burden?
On 13 September 2021, the Victorian Government announced the Commercial Landlord Hardship Fund 3 for landlords that are doing the right thing and waiving rent for their tenants under the CTRS. Eligible landlords are able to apply for grants of up to $6000 per tenancy. Landlords may be able to access multiple grants under the scheme, provided, they meet the eligibility criteria and submit a separate application for each tenancy.
Small landlords may be eligible in some situations of acute hardship for grants of up to $10,000. Acute hardship is found in situations where rent received from commercial leases represents 70% or more of someone’s total gross annual income for the 2019-2020 financial year. Applicants for acute hardship must submit a qualified agent letter when applying under the scheme.
Eligibility requirements for landlords under the scheme
The program guidelines require landlords to:
- be providing rent waivers of 50% or more under the CTRS (evidence of which to be provided);
- have taxable land holdings under $3 million (excluding primary place of residence);
- intend to use the grant to offset the waiver they have provided; and
- confirm property ownership via their customer number on the Land Tax Assessment Notice or Municipal Rates Notice for 2020-2021.
In addition, an important change has been made to the eligibility requirements that operated under the Commercial Landlord Hardship Funds 1 and 2. Landlords now must attest that commercial rent represents more than 50% of their total gross annual income for the 2019-20 financial year. This is an important change that may affect eligibility in some circumstances.
Both individuals and incorporated entities are eligible for the grant program provided that they meet the previously mentioned eligibility criteria.
Is your tenant ineligible?
The scheme applies only to those landlords who are providing rent relief under the CTRS. Landlords who have tenants who do not meet the requirements under the CTRS are not eligible for grants under the scheme.
Have you received previous grants?
If you have received a grant under Commercial Landlord Hardship Funds 1 and/or 2, you are able to still apply for grants under round 3 provided that you meet the eligibility requirements. It is important to note that eligibility requirements have changed as previously outlined. It is worth checking the new eligibility requirements before assuming you are eligible.
Are you a joint owner of a commercial premises?
Where there are multiple landlords of a commercial premises, grants will be allocated in accordance with the ownership share of the property. For example, if you are an eligible landlord with a 25% share, you will be able to apply for $1500 under the scheme.
Each owner must meet the eligibility requirement listed above to receive their portion of the grant. In addition, each landlord must provide information on the rent relief provided to their commercial tenants under the CTRS when applying.
Do you own your own business premises?
It is possible to apply for the scheme if you own the building in which you are a tenant. However, in order to be eligible, the commercial property must be held by a separate legal entity to the business. This could be in the form of a trust or company. As long as it is not held by the same legal entity as the business, you are eligible provided that you meet the other eligibility requirements set out above.
Applications for grants made under the Commercial Landlord Hardship Fund 3 close at 11:59pm on 15 January 2022, or when funds are exhausted.
If you would like to find out more, please reach out to the team at Robertson Hyetts to discuss the particulars of your matter and how we can best assist you in Bendigo on 03 5434 6666 or in Castlemaine on 03 5472 1588.