Victorian commercial property owners who have already provided hundreds of millions of dollars in rental relief to struggling businesses will be placed under further financial stress by new regulations introduced by the Victorian Government.
While a range of meetings were held about the nature of the changes, the regulations themselves have been imposed with no consultation despite the extension of the scheme being announced six weeks ago on 20 August.
Property Council of Australia Chief Executive Ken Morrison said the updated regulations contain several worrying provisions.
Commercial property owners are required to provide rent relief in proportion to the fall in turnover being experienced by the tenant associated with the premises. Previously, this was one of several factors to be considered during rent relief negotiations including a landlord’s capacity to pay.
However, the new regulations, due to operate until the end of this year, remove any consideration of the landlord’s own capacity to provide rental relief for tenants, even though they also have liabilities which they must meet, including to lenders and local and state government.
More power has been given to the Victorian Small Business Commission (VSBC), including the authority to make binding orders for rent relief.
“The new regulations are far too heavily weighted against commercial property owners who are also doing it tough,” Mr Morrison said.
“These regulations hit smaller property investors for whom commercial property may be their primary source of income. These are people who do not have other resources to draw on in providing rental relief.
“Commercial property owners are being forced to carry the financial burden imposed by government directions while no other section of the business community has been required to provide similar financial support to other businesses.
“Binding orders through the Small Business Commissioner are also an unnecessary and confusing overreach at a time when the code should be winding down and the government focusing on a safe way to reopen the CBD and stimulate the economy.
“These regulations assume that commercial property owners set out with poor intent, and do not reflect the desire of the overwhelming majority of property owners to support their tenants to the best of their capability during these very challenging times,” Mr Morrison said.
Media contact: Emily Young | M 0475 161 328 | E [email protected]