The Victorian Government will bring urgent legislation to reform residential and commercial tenancy laws to support tenants and landlords through the coronavirus pandemic.
providing land tax relief for landlords and rent relief for tenants experiencing financial hardship
introducing a temporary ban on evictions, and
pausing rental increases for six months.
The Stage 3 restrictions designed to help slow the spread of coronavirus have had widespread economic consequences, leaving many businesses with no cashflow to pay their rent, and many workers without jobs – making it increasingly difficult for them to pay rent at home.
Land Tax Relief
To encourage landlords to do the right thing by their tenants, the Government will provide $420 million in land tax relief.
If a landlord provides tenants impacted by coronavirus with rent relief, they will be eligible for a 25% discount on their land tax.
This relief is also available to landowners who are unable to secure a tenant because of COVID-19.
Deferred Payment of Land Tax
At the same time, any remaining 2020 land tax can be deferred until 31st March 2021. refunds on Land Tax already paid are available in certain circumstances.
Who gets the Relief?
The 25% discount and the deferral relief are available for residential and commercial properties, however, for commercial landlords to be eligible, the property must be rented to a tenant with an annual turnover of up to $50 million, and the tenant must be eligible for the Commonwealth Government’s JobKeeper Payment.
To provide much needed peace of mind and security, evictions will be banned for residential tenancies for six months, except in some circumstances.
Evictions will also be banned for six months for the non-payment of rent for commercial tenancies involving small and medium-sized businesses.
Rental increases will also be banned for commercial and residential properties for the same period.
The Federal Government is legislating a mandatory code of conduct is being created for commercial tenancies
(See MKA article Landlord must give a rent Waiver or Deferral)
The code requires commercial property landlords to grant small and medium sized businesses rental waivers and deferrals.
Businesses are eligible for these measures if they have an annual turnover under $50 million per year and have experienced more than a 30 per cent reduction in turnover due to coronavirus.
Residential Rental Assistance
The Government will also create an $80 million rental assistance fund for renters facing hardship due of coronavirus. To be eligible, renters will need to have registered their revised agreement with Consumer Affairs Victoria or gone through mediation, have less than $5,000 in savings and still be paying at least 30 per cent of their income in rent.
When does this apply?
Even though legislation (and the final format of the law) is yet to pass, these new measures will come into effect from 29 March for a period of six months.
Agreement for rental waiver/reduction
Tenants and landlords who struggle to strike a deal over rent reductions will be given access to a fast-tracked dispute resolution service, with Consumer Affairs Victoria or the Victorian Small Business Commission mediating to ensure fair agreements are reached.
Financiers to give concessions too
The banks have an agreement with the government to ease up on lending restrictions, loan interest and to provide relief on payments. These are discussed in 2 articles on our website:
Why must the landlords suffer?
Everyone is suffering; many small businesses are closed with no idea when or if they can re-open; and many individuals are now out of work again with no idea when regular employment will resume.
Landlords are being asked to share the load and ease the pain on some.
At the other end of this crisis, landlords will need tenants, and tenants that can afford to pay. These rental waivers and deferrals are an exercise is copping some small pain now for the longer term gain. A harsh line by the landlords now will result in properties being vacated by tenants who have gone broke. Re-letting those properties:
may take months,
may necessitate some rent-free or shopfitting concessions (especially on commercial properties),
will involve additional letting agent’s fees, and
certainly, won’t be let at the same rent that is currently being earned.
And the legal battle recover unpaid rents from tenants that the landlord refused to grant concessions to, will be costly and probably unsuccessful.
It’s better to keep the tenant if you can, even if a few concessions are needed.
The Minister for Consumer Affairs, Marlene Kairouz, says “These are unprecedented measures – but we are facing an unprecedented crisis. With this support, we’ll help tenants cover the rent and keep a roof over their head.”
On the commercial side, the Minister for Small Business, Adem Somyurek, says “This support will help small businesses keep their doors open, keep employing and keep driving the state’s economy.”
If you need any help understanding these concessions or the new waiver/deferral rules, then contact any of the MKA team on (03) 9585 7555 or email us at email@example.com