The Government has landed on a balanced package of changes to improve rent relief measures for both landlords and tenants hit by COVID-19 restrictions, according to Minister of Justice, Kris Faafoi.
“Businesses in the Auckland region, and elsewhere under COVID Alert Level Three, have been doing it tough, and the Government has been responding with support in various ways,” Faafoi said.
“The measures we are introducing around rent relief as part of the COVID-19 Response (Management Measures) Legislation Bill will offer more support measures, particularly for small to medium sized businesses hit hard by the restrictions that have been needed to contain COVID-19.
“We are aware that many lease agreements already have provision for adjusted rent payments during an epidemic emergency, and many landlords and tenants have been able to negotiate agreed rent relief terms between themselves as a result of previous lockdowns.
“In providing this support, we are also incorporating changes suggested by landlords and tenants to the Finance and Expenditure Select Committee. The changes will provide additional clarity and options for landlords and tenants to agree a fair proportion of rent to be paid where COVID restrictions have impacted a business’s ability to operate.”
The changes introduced to the Bill will include a requirement to consider a commercial tenant’s loss of income in determining what a ‘fair proportion’ of rent relief would be.
Other changes include:
- A requirement that the parties to a commercial lease with this implied clause must respond to each other within 10 working days of communication about the clause.
- Clarifying that parties may seek to resolve disputes through mediation or other forms of alternative dispute resolution before a referral to arbitration, and that the Disputes Tribunal’s jurisdiction is not excluded as an option.
- Making the changes apply retrospectively from 18 August 2021, being the first day of the current COVID-19 Delta higher alert level restrictions.
“Applying these measures from 18 August means businesses which have suffered serious loss of income due to the recent Delta alert restrictions will be able to access help to agree fair rent relief,” concluded Faafoi.
Hospitality New Zealand has welcomed the announcement.
“We are delighted with the decision to backdate the rent relief clause to the start of the current lockdown, ensuring hospitality businesses can seek rent relief during the most recent Alert Levels 3 and 4,” said Julie White, Hospitality NZ Chief Executive.
“As we know, as soon as the country enters a lockdown, the impacts on the hospitality sector are immediate, with both zero revenue and stock losses hitting the bottom line. That’s why the ability to negotiate during the recent Level 3 and 4 periods across the country was a critical change that needed to be made in order for the proposals to be effective.
“We are grateful that Minister Faafoi and the Government have listened to our feedback and have enabled clear guidance and support for landlords and hospitality venues to negotiate rent relief.”
The commercial rent relief changes add to the other COVID-19 business support measures the Government has implemented, such as the wage subsidy, an increase to the Resurgence Support payment scheme, and funding for business advice and mental health support.