Legislation introduced in Victoria to regulate commercial tenancies .

On 24 April 2020, Victoria passed the COVID-19 Omnibus (Emergency Measures) Act 2020 (COVID-19 Act). This follows the mandatory Code of Conduct for commercial tenancies (Code) recently issued by the National Cabinet.

The COVID-19 Act gives the Governor in Council, on the recommendation from the Minister for Small Business, powers to make regulations to give effect to the Code.

Eligibility criteria for leases.

The COVID-19 Act applies to ‘eligible leases’, which are retail or commercial leases or licences:

• in effect on the day the first regulations come into operation;
• where the tenant or licensee has an annual turnover of up to $50 million; and
• where the tenant or licensee qualifies for, and is also a participant in, the JobKeeper program.

There are some exceptions, for example, where the tenant or licensee is a member of a group of companies and the group’s aggregate turnover exceeds a certain threshold amount.

Regulation-making powers.

The powers under the COVID-19 Act allow regulations to be made in respect of ‘eligible leases’. These may include:

• prohibiting the termination of a lease;
• changing or limiting any other right of a landlord under the lease;
• exempting a landlord or tenant from having to comply with the lease or related agreement;
• modifying the application of the common law and relevant legislations under which the lease would ordinarily be subject;
• extending the lease period;
• deeming certain provisions as forming part of the lease;
• imposing new obligations on landlords and tenants, including requiring them to negotiate amendments; and
• requiring landlords and tenants to participate in mediation.

Until the regulations are released, it is unclear how closely the regulations will follow the Code.

What next?

As outlined in our recent blog, the Code includes overarching principles relating to negotiations and frameworks to guide landlords and tenants.

It is anticipated that the regulations will be issued shortly. As the regulations will set out how the key aspects from the Code should operate in practice, landlords and tenants across Victoria are eagerly awaiting their release.

We can help.

This is an uncertain time for commercial tenants and landlords. We can help keep you up to date on the changing landscape for commercial leases as regulations under the COVID-19 Act are introduced and assist you to understand your rights, obligations and options in the context of any lease variations and negotiations.

For details of all of our COVID-19 tips and updates, visit the Bespoke COVID-19 Hub.