CTRS Regulations – My First Comments

Ok - so there is a LOT to work through.

I recommend that readers start with the post from Easternbridge lawyers linked to my last post. Here it is again: https://www.easternbridge.com.au/post/ctrs-2021-regulations

My preliminary comments on the new Regs are as follows:

· People may have started negotiations for rent relief already (in fact, the government encouraged landlords and tenants to do so). However, there are consequences in the Regulations for not following the established procedures. Practitioners should be advising their tenants to make a compliant request for rent relief before 30 September 2021, even if negotiations are well-progressed to avoid being shut out of rent relief if those negotiations stall.

· The new request procedure requires the landlord to take into account 'other circumstances' that the tenant wants taken into account. While it is unlikely that this means circumstances unrelated to COVID must be considered, this would allow a tenant to put arguments and data about how and why its business should receive more than the minimum rent relief (eg it it was disproportionately affected by the responses to COVID other than lockdowns, such as restrictions on mass gathering).

· Practitioners should be particularly aware of the significance of 30 September 2021. Failure to make a compliant request for rent relief before that date can affect the tenant's ability to seek rent relief for the period 28 July to 30 September 2021 and it also triggers the obligation to submit information for reassessment.

· Practitioners advising tenants should also make a diary note to file an application to the VSBC for mediation 14 days after the tenant makes a compliant request for rent relief as the tenant is deemed to have accepted the landlord's first offer if the application to the VSBC is not made (unless agreement for rent relief has been reached).

· Practitioners advising tenant should also be aware of the requirement to provide for a re-assessment prior to 31 October 2021, as a failure to provide that information puts the tenant at risk of losing any agreed rental waiver.

· Curiously, the new regulations have stated that a rent review that increases the rent between 28 July 2021 and 15 January 2022 will not be frozen over that period, but will be permanently 'lost'. This was, and continues to be, hotly debated under the old CTRS. It is also unclear at this stage whether a market rent review that falls between those dates is 'lost', however there are conceptual difficulties in determining whether or not a market rent review will increase the rent without the review being conducted.

The Office of the Small Business Commission to published useful material on the CTRS last year. I'll post links anything from their office as soon as I see it.

This post originally appeared on Sam Hopper's Blog