Victoria urged to call time on commercial rent relief

Victorian landlords are urging the state government to resist extending its emergency relief measures for commercial tenants, which are due to expire at the end of the year. 

The legislation, introduced to assist tenants facing coronavirus-induced financial hardship, had been a source of contention for landlords throughout the pandemic, who argued they had been left bearing a disproportionate burden as compared to tenants.

While the Victorian government introduced rent relief grants in August to assist landlords who provided a discount or rent deferral to tenants, a new campaign has emerged to phase out the relief measures at its December 31 expiry date.

Property Council of Australia Victoria interim executive director, Matthew Kandelaars, said the measures were introduced to deal with an unprecedented crisis, but were no longer necessary.

Victoria is on track to ‘COVID normal', with restrictions being steadily lifted and the commercial properties returning to normal operations,” Mr Kandelaars said.

“This new normal means a return towards normal trade and these blanket relief measures are no longer fit for purpose.”

Mr Kandelaars said the blanket ban on evictions should be replaced with more targeted measures to assist the small businesses still affected by COVID-19.

He said landlords across the state had provided billions of dollars of assistance to tenants, both within and outside of the scheme.

“Commercial landlords remain the only sector of the business community that have been legally obligated to provide financial support to other businesses during the COVID period,” Mr Kandelaars said.

“Yesterday’s announcement from the Government of a clear return to office pathway gives certainty to many businesses about their operations in 2021.”

“However, uncertainty will continue for mum and dad investors if commercial landlords are compelled into a third round of rent relief negotiations.”

A decision from the Victorian state government is expected to come shortly.

Pitcher Partners Melbourne executive director Andrew Clugston said much of the industry was taking a wait and see approach prior to an announcement as to whether the measures would be extended.

“The general feeling is that if they do extend the relief it will be applicable to a lot less tenants as less will be eligible for JobKeeper,” Mr Clugston said.

"If the tenant doesn’t qualify for Jobkeeper they are not covered by the rent relief regulations. 

“It is hard to know for sure how many will be eligible but it’s fair to say most landlords are in a less generous mood now the harsh lockdown has ended."

Mr Clugston said while the extended COVID relief measures had extracted a toll on landlords, there was not yet widespread financial distress.

"Another 3 months of reduced income is unlikely to cause the forced sale of assets as banks are being patient," he said.

"The real test will be when Jobkeeper and rent relief ends and tenants must start to repay rental arears. 

"If this proves too much and tenants are forced to close permanently, this will become a significant issue for landlords if it occurs in large numbers.

"We are all watching to see what happens to tenants post March 2021 as this will drive the longer term prospects of each building particularly any building with an exposure to retail or hospitality."