As the Omicron variant continues to wreak havoc on small business, the State Government has announced an extension of the Commercial Tenancy Relief Scheme (CTRS).
KR Peters Director Peter Nicolls welcomed the announcement, saying the scheme has been a "life support mechanism" for both landlords and tenants.
"For landlords it has enabled them to continue to receive a part rent from the tenant. The deferment part of the rent will act as a booster shot if the tenant is still operating and able to pay that portion of the rent," he said.
The CTRS was created in 2020 and reintroduced in July 2021 to support small to medium businesses. It will be extended to 15 March 2022 helping businesses with an annual turnover of $10 million or less which have suffered a decline in turnover of at least 30 per cent due to COVID-19.
Landlords will be required to provide continued proportional rent relief in line with a reduction in turnover. For example, a business with a turnover of 40 per cent of pre-pandemic levels could only be charged 40 per cent of its rent.
Of the balance, at least half would be waived, with the remainder to be deferred. The freeze on rent increases will continue.
"The CTRS payment to landlords enables them to make a part payment of their mortgage to their lending provider and hopefully the ability to negotiate a payment of the outstanding debt knowing that a deferred payment will be made," Mr Nicolls explained.
"Landlords that own property in a superannuation fund are handicapped as they do not receive assistance of the CTRS."
Mr Nicolls said tenants who qualify for the CTRS relief package will likely argue that the relief is not enough and that making the deferred payment on the agreed date will become an issue unless everything returns to some normality.
In its statement announcing the extension, the government confirmed that the Victorian Small Business Commission (VSBC) will provide mediation support to tenants and landlords if parties cannot reach a satisfactory agreement.
"The Omicron virus is causing pressure in hospitality, retail, professional and travel businesses with businesses operating on reduced hours due to lack of staff," Mr Nicolls said.
"Without the CTRS relief scheme complete chaos would be the new norm."