Post-pandemic Pains Caused by Government Commercial Rent Delays

Early last month the government promised a fund of $40 million for small businesses to apply for, to settle disputes between landlords and tenants over commercial leases.

Small business owners are feeling abandoned, however, over what they call failures to implement effective measures to control rent and lease arrangements. At the time the fund was announced, business tenants said they believed it would allow many to be able to progress discussions with their landlord but not a single dollar of that fund has been spent.

"The Bill has not yet been enacted and as such final decisions about the eligibility for an arbitration subsidy have not yet been made,” said Caroline Greaney, the Ministry of Justice's policy general manager, civil and constitutional.

Justice Minister Andrew Little said he understood small business owners' disappointment in the government and said he shared the frustration over the delays to distributing the allocated funds.

Many feel that the government has not done enough to establish rules around rent increases. In April, the government said they were considering rent concessions, but ruled out a subsidy or a freeze. While a freeze on rent increases was put in place for residential leases, no such measure has been put in place for commercial leases. In May, it was announced businesses would be able to take out 12-month interest-free loans, up to $100,000, however, loans are not suitable for all business owners.

Julie White, the head of Hospitality New Zealand, said other businesses are now beginning to face trouble from their landlords, including those in resort towns such as Queenstown. Chair of the town's Chamber of Commerce Craig Douglas said some businesses can barely afford to pay full rent, let alone having to deal with an increase.

"Yes, landlords need to make a return on their business as well, but there's only so much money to go around," he said. "Each landlord and tenant relationship is going to have to work out something that is sustainable for both of them to get through."

Little said he understood the disappointment among some over the perceived failure of government to assist with settling disputes.

"People are entitled to look to government, and say 'we do need some assistance' when you've got some parties who are unwilling to come to terms. We haven't been able to provide that assistance so far. I'm confident that with further discussions, we will get somewhere. But this is taking much longer than I would have liked.”