Victorian rent relief protections may exclude SMSFs
Landlords owning property through an SMSF in Victoria may not be covered by the COVID-19 tenant protections that apply under recently passed legislation, according to a law firm.
Under the COVID-19 Omnibus (Emergency Measures) Bill 2020 passed by the Victorian Parliament on 23 April, clause 13 defines what an eligible lease is for which tenants can seek relief from their landlord.
However, under subclause 3 of clause 13, the bill states that a retail lease or non-retail commercial lease or licence will not be eligible for rent relief if:
“An entity has a prescribed method of control or influence, through the holding of a prescribed interest, right or power, in relation to acts or decisions relating to the ownership, management or affairs of a tenant under the retail lease or a non-retail commercial lease or licence that is a body corporate.”
Speaking to SMSF Adviser, DBA Lawyers special counsel Daniel Butler said SMSFs in Victoria may not be protected by the COVID-19 tenant protections.
As a result, he said landlords will instead have to rely on national fair trading laws for protections.
“I understand why ‘related parties’ would be carved out as an SMSF landlord having some influence or control over the tenant’s business — therefore, there is no need to protect the tenant from the landlord under the legislation. Thus, the SMSF and related party are left to negotiate together without the protection offered by the COVID-19 Omnibus (Emergency Measures) Act 2020 (Vic),” Mr Butler said.
“This raises some interesting issues on how SMSFs with related-party tenants (including where the SMSF owns the property via a unit trust) manages any rent adjustment under COVID-19 and what evidence and basis it does so.
“I’ve already noticed a few SMSF suppliers suggest that trustee resolutions are the best way to vary leases and they are touting their products for cheap with questionable legal basis.”
Earlier this month, the Victorian government announced its plan for land tax relief for landlords as part of a $500 million package to reform residential and commercial tenancy laws.
Adrian Flores is the deputy editor of SMSF Adviser. Before that, he was the features editor for ifa (Independent Financial Adviser), InvestorDaily, Risk Adviser, Fintech Business and Adviser Innovation.