Tourism operators unable to pay rent on commercial leases as a result of the Covid-19 response will be able to access Government assistance to resolve disputes with landlords, says justice minister Andrew Little.
The Government has made a temporary amendment to the Property Law Act, inserting a clause in commercial leases requiring a fair reduction in rent where a business suffered a loss of revenue because of Covid-19.
The package would invest up to $40m in providing access to arbitration in a timely and cost-effective way to support small or medium businesses to reach agreement on a fair rent.
“I am concerned that some landlords and tenants are not coming together to make agreements that reflect the seriousness and uniqueness of Covid-19, including behaviour where large commercial tenants refuse to pay rent, and landlords demanding rent from small retailers who haven’t been able to operate,” said Little.
“What is required is fairness between commercial tenants and their landlords. That is why the Government is moving to ensure there is appropriate rent relief, with the burden shared by landlords, tenants, and the Crown.”
To be eligible for the implied clause a business needed to have 20 or fewer full-time staff at each leased site and be New Zealand based. Where businesses and landlords had already been able to reach agreement in response to Covid-19, they would not be able to use the new process.
“The package provides a way of helping businesses that are facing a severe loss of revenue, through no fault of their own, as a result of Covid-19 and will provide them with some certainty around commercial rent agreements,” said Little.
The package would provide a subsidy of up to $6,000 per arbitration. This meant the Crown would cover about 75% of the arbitration cost.
The Cabinet Paper and Minutes released by the minister of justice can be downloaded here.
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