New Zealand government eyes ways to address commercial rent payment concerns

As COVID-19 continues to take a toll on the economy, the government is considering changes to the Property Law Act

New Zealand government eyes ways to address commercial rent payment concerns

The New Zealand government is eyeing ways to address the commercial rent payment concerns faced by businesses in the wake of COVID-19.

New Zealand had dropped the pandemic alert level from 4 to 3 just last week on 28 April.

“While 75% of the economy is up and running again under level 3, we know many businesses, especially our smaller ones, have been hard hit by a drop in revenue and are struggling to meet their fixed costs,” said Minister of Justice Andrew Little.

As a result, the government is considering a number of rent relief options.

“To add to the wage subsidy and other support in place, Cabinet Economic Development Committee ministers today discussed options around changing the Property Law Act to support New Zealand businesses in managing their rent,” Little said. “This includes how parties to a commercial lease would be expected to consider rent concessions in whole or in part for a period where the response to COVID-19 has had a material impact on a business.”

Despite calls for rents to be frozen in this period, Little stated that a blanket rent freeze would not be a fair option, particularly since many landlords had already agreed to lower rents.

“The lockdown has affected businesses in different ways. Landlords need to share the burden of COVID-19 fairly with their tenants,” he said. “We had heard the call to subsidise rent or to freeze rents. However both of these approaches would have meant commercial property owners would have had their income protected at a time when no one else enjoys that privilege.”

Little said that the government considered the Property Law Act and the Residential Tenancies Act to be “entirely different pieces of legislation, with different types of rights and case law.”

“We have already announced we will amend the Property Law Act 2007 to push out deadlines on lease terminations, but it is clear from information we have received this alone is not enough in many cases,” he said.

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