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Business Insights – 14th September 2021 – Commercial rent relief for Vic and NSW

I’m here with insights for Australian businesses on 14th September 2021.

Tenfold clients and small-medium businesses who are commercial tenants may be able to get their rent reduced if their business has been impacted by lockdowns and their turnover has declined since May this year. Many of you are managing the largest cost of your business, being wages. Rent is another major expense for many of your businesses, so with the lockdowns likely to continue, it’s worth looking into how this cost can be reduced while your revenue is being impacted.

Similar to the scheme that we saw last year, if your turnover has declined by 30% you are entitled to seek rent relief from your landlord. Again, the rent relief would be 50% waived and 50% deferred.

Both NSW and Victoria have implemented the schemes, however a review by our business coach experts show that the rules and requirements differ.

 

NSW Commercial Rent Relief

In NSW, eligibility is based on qualifying for one of the NSW 2021 business support grants. There is no set period to calculate decline in turnover for NSW businesses.

For Tenfold clients and businesses with premises in NSW, see: https://www.smallbusiness.nsw.gov.au/get-help/covid-19/commercial-leases-and-covid-19-faqs

 

VIC Commercial Rent Relief

In Victoria, where the previous scheme had JobKeeper participation as the main eligibility criteria, this time it compares 3 consecutive months of 2021 (between 1 May – 30 Sept) to the same period in 2019.

Key points for Victorian commercial tenants:

  • It’s effective from 28 July 2021 and will run until 15 January 2022
  • As the tenant, you can choose the comparison periods of 3 consecutive months between 1 April 2021 – 30 September 2021, compared to the same period in 2019.
  • There are alternative tests (speak to a Tenfold business coach about applying one of these):
    • Businesses that have had substantial increase in turnover
    • Businesses that have had irregular turnover
    • Businesses that weren’t trading before 1 April 2019
    • Businesses that had temporarily ceased trading
    • Sole trader or small partnership with sickness, injury or leave
  • You can apply to have your rent relief backdated to 28 July, but you must apply before 30 September. If you apply after 30 September, the rent relief is only from the date of your application.
  • For tenants who apply before 30 September, there is a mandatory check-in point on 31 October to assess the rent relief – the amount of relief may be increased or decreased at this point. There’s more detail to this – see FAQs 31 and 32

More information on the Victorian Commercial Tenancy Relief Scheme can be found here: https://www.vsbc.vic.gov.au/fact-sheets-and-resources/faqs/#commercial-tenancy-relief-scheme-2021-faqs

 

How to apply for Commercial Rent Relief in Victoria

Your business coach can help you assess your eligibility for rent relief. Even if you think your business may not qualify, I recommend that you run the numbers so that you can make an informed decision.

I know some Tenfold clients and business owners chose not to apply for some of the recent government grants, and I expect some will also pass on seeking rent relief. It is still worth checking your eligibility as this may help you with future negotiations with your landlord on matters such as rent increases or other aspects of your lease.

If you do decide to seek rent relief, these are the main steps:

  1. Notify your landlord in writing that you are requesting relief
  2. Provide details of your eligibility – see FAQ 13
  3. Provide a stat dec attesting to the information provided in your application (Note: this is a new requirement under this year’s scheme)

There are templates available for the notifications on the VSBC site – see FAQ 13 here: https://www.vsbc.vic.gov.au/fact-sheets-and-resources/faqs/#commercial-tenancy-relief-scheme-2021-faqs

Reminder: if you’re going to seek your rent relief to be back-paid from 28th July, you need to have your application in (including your stat dec) to your landlord by 30th September 2021.

 

Business owners who are landlords of commercial premises in Victoria

To compensate you for providing rent relief to your tenants, you’ll be entitled to land tax relief of up to 25%. For more information, see: https://www.sro.vic.gov.au/2021-coronavirus-land-tax-relief

Some Tenfold clients who have progressed on their big picture plans have acquired commercial premises, such as a factory, warehouse, or manufacturing facility. In many cases those commercial premises are often held in an asset owning entity and leased back to the operating business. Speak with your business coach about what you may be entitled to under this scheme.

I’ll be back later this week with more information on opportunities to use the government backed SME Recovery Loan scheme to advance your big picture plans.

 

Ash

Ashley Thomson B.Eng. (Hons), Grad. Dip. Mgmt, MEI
Managing Director
Tenfold Business Coaching

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