The Commercial Tenancies Relief Scheme (CTRS) will be reinstated to provide rent relief for small to medium commercial tenants and their landlords with more details on the roll out to be provided by the Victorian Government soon. Legislation will shortly be introduced to enact the Scheme, which will be applied from today to ensure rent relief can start immediately.
Under the scheme, landlords will be required to help eligible businesses that have endured a serious trading downturn. The Scheme will be available to businesses with an annual turnover of less than $50 million and have suffered a decline in turnover of at least 30% due to COVID-19.
The Shopping Centre Council of Australia (SCCA) is disappointed by the Victorian Government’s announcement today to reintroduce the CTRS.
“This is bad policy, made badly – delivered without consultation to those on the ground, with no regard for its consequences,” said SCCA CEO Angus Nardi.
“Our industry has shared the pain and provided $550 million in rental abatement in Victoria under the previous Scheme, mostly to small retailers directly impacted by decisions made by the Victorian Government”, he said.
“It’s a slap in the face for an industry that has demonstrated good faith with the Victorian Government every step of the way. We are dismayed at this announcement which ignores the reality of what is occurring on the ground where the Council’s members are working around the clock to help businesses doing it tough”, Nardi continued.
Landlords will be required to provide proportional rent relief in line with a business’s reduction in turnover. For example, a business with a turnover of 40% of pre-pandemic levels can only be charged 40% of its rent. Of the balance, at least half must be waived, with the remainder to be deferred.
Tenants and landlords will be encouraged to enter negotiations directly, with the Victorian Small Business Commission (VSBC) available to provide mediation if parties cannot reach satisfactory agreement. Landlords will not be able to lock out or evict tenants without a determination from the VSBC.
“Our members deeply appreciate the difficult time small and medium sized retailers are experiencing especially as a result of the cashflow impact of government lockdowns. Like the banking industry our members have proven mechanisms to stay in close contact with their retailers and are focused on working with their SME retailers on deferrals where they are needed. All our members are also continuing to operate with COVID Safe protocols and are working hard to be well prepared for an anticipated rebound in trading conditions as the COVID situation improves” said Nardi.
The Victorian Government have also announced a new $85 million fund will be established to support small businesses who have not been eligible under existing business support funds. Small businesses with a payroll of up to $10 million who have experienced a 70% or greater reduction in revenue will be eligible for grants of up to $5,000.
Minister for Small Business Jaala Pulford said, “As we emerge from lockdown, this is exactly the right time to provide relief for those businesses that need extra assistance to get back on their feet. We’re calling for good-faith negotiations between tenants and landlords, and the hardship fund will mean landlords who find reasonable common ground will be supported.”
The latest round of COVID lockdowns has had a catastrophic impact on many Australian small businesses and retailers. With the country’s two largest states having been in prolonged lockdown, urgent assistance is required to prevent thousands of Australians joining the unemployment queue.
Victoria has had severe lockdown restrictions lifted this week, however the largest state economy being New South Wales will remain in lockdown until the 28 August. The extra four weeks of lockdown will have major impacts on all businesses and amount to billions lost in the retail sector.
A coalition of Australia’s peak industry groups – the National Retail Association, Franchising Council of Australia, and the Australian Association of Convenience Stores has also unveiled a five-point plan for business survival and seeking its endorsement from National Cabinet which includes the introduction of JobKeeper 3.0, emergency cash payments and a National Leasing Code of Conduct mark 2.
National Retail Association (NRA) CEO Dominique Lamb, said, “Retail is one of Australia’s most important sectors and significant job losses are inevitable if further assistance is not granted to businesses in lockdown locations. Retail is worth more than $350 billion to the Australian economy. It provides the country’s second-largest workforce, employs more young people than any other sector and is a key barometer to Australia’s broader economic outlook.”