In line with recent announcements by the New South Wales and Queensland Governments, the Victorian Government has announced a $420 million land tax relief package to support landlords who are financially impacted by the COVID-19 pandemic. The relief measures follow the release of the new mandatory commercial tenancy code of conduct (the Code) by the National Cabinet last week.

In summary:

• Commercial and residential landlords will be eligible for a 25% discount on their land tax if they provide tenants impacted by the pandemic with rent relief
• Any remaining land tax can be deferred until March 2021
• For commercial landlords to be eligible, the property must be rented to a tenant with a turnover of under $50 million who is eligible to participate in the JobKeeper program
• Relief may also be available to landlords who cannot secure a tenant as a result of COVID-19.

At this stage, the Government has not announced what level of rent relief must be provided to tenants for a landlord to be eligible for the land tax relief. It is plausible that the relief will be tied to the ‘proportionality principle’ introduced by the Code, which obliges landlords to reduce a tenant’s rent in proportion to a tenant’s loss of income.

We also expect that landlords will be obliged to pass on the reduction in land tax to tenants, if land tax is recoverable as an outgoing under the relevant lease. This is expressly contemplated by the Code, but has not yet been flagged by the Victorian Government. We expect further details in this regard to be released shortly, as the Government moves to bring the urgent legislation before Parliament.

As expected, the Government has also confirmed that it will be legislating a temporary ban on evictions, a six month ban on rental increases and a framework for small and medium sized business to be granted rental waivers and deferrals, in line with the Code.

The above content is commentary rather than legal advice and was prepared on the basis of applicable legislation, government programs and initiatives that were in place as of the date of publication. Given the ongoing evolution of both the COVID-19 pandemic and frequent consequential changes to the various laws and programs within all Australian states and territories, readers should seek legal advice on the current situation as applicable to their specific circumstances before taking any action in relation to the above.