- Changes to the rent relief program were announced last week
- The real estate industry body said it ignored the plight of mum and dad investors
- Argues investors aren't adequately compensated for rent reductions or waivers
The renewed Commercial Tenancy Relief Scheme Regulation has been criticised by the Real Estate Institute of Victoria (REIV) who said it ignores the plight of everyday mum and dad investors.
The REIV warns that the “one-sided” program will see many small and medium-sized property owners enter financial distress, adding that many of these are self-funded retirees.
While the Institute welcomes land tax concessions, it said it was a small amount of compensation compared to the financial loss brought about by waiving commercial tenant rents.
Leah Calnan, REIV President, said the government support for tenants come at the expense of the supply side, which she argued had pushed a large number of property owners into greater debt.
“When businesses are finally able to re-open, several owners will be forced into selling their investment properties into a difficult market, just to make ends meet,” said Ms Calnan.
“While tenants will not be required to repay waived rents many others are unlikely to have the capacity to repay any of the deferred rents in the near term, if ever.
“It should also be remembered that suspension of mortgage repayments by banks is only a deferral on repayments, unlike the rent reductions, which means that the landlord still needs to pay with interest, notwithstanding the reduced income.”
Leah Calnan, REIV President
Under the new financial relief program, commercial tenants can receive a proportionate reduction in rent.
A business with a turnover of 40% of pre-pandemic levels can only be charged 40% of its rent for example. In this case, at least half of the balance must be waived by the landlord, with the remaining to be deferred.
In turn, the state government will provide land tax relief of up to 25% to the landlord. Landlords that can demonstrate acute hardship can apply for payments up to a maximum of $3,000 as part of a hardship fund.