Both tenants and landlords are criticising the Government’s proposed changes to commercial rent relief.
The Government said its Covid-19 Response Legislation Bill will help ease the impact of pandemic restrictions on commercial and residential tenancies. The Bill passed its first reading on Wednesday.
The proposed law adds a clause to the part of the Property Law Act dealing with commercial leases. The amendment would encourage both landlords and tenants to share the cost of pandemic business struggles.
Justice Minister Kris Faafoi said the Bill would require a “fair proportion of rent to be paid where a tenant has been unable to fully conduct their business in their premises due to the Covid-19 restrictions”.
“Landlord and tenant would need to agree on the amount of rent that is fair. They could also agree that the clause does not apply,” Faafoi said.
Arbitration will be required where landlords and tenants are unable to come to an agreement about fair rent proportions. That’s unless they agree to an alternative dispute resolution process like mediation.
However, tenants say they would still prefer more financial support from the Government for fixed costs like rent.
David Meagher is the owner of Sal Rose Restaurant, a favourite in Auckland’s Mount Albert for 17 years.
“What we need now is more support straight away,” Meagher told 1News.
He said the “last thing” business owners should have to worry about is getting dialogue and responses from their landlords.
Last year, it took six months for the business to get any kind of rent relief. This time, they're in the dark.
“I’ve been here for such a long time, you’d think that your landlord would have the courtesy to reply to you in a favourable time,” he said.
Meanwhile, big landlords say the Government’s proposals were taking a blunt stick to a complex problem.
Precinct Properties, which own the likes of Commercial Bay in Auckland CBD and Central on Midland Park on Wellington’s Lambton Quay, said it had provided rent relief to all tenants who needed it.
Precinct Properties CEO Scott Pritchard said some companies were “doing very well” during pandemic times “but still seek a hand out whether they have the right to that or not”.
“I think the intent [of the Government’s proposal] is smaller companies which are facing hardship. So, some sort of criteria that captures that I think is absolutely required for this Bill.”
National’s shadow treasurer Andrew Bayly said the Government has “basically sideswiped the financial cost of a Government-imposed lockdown and transferred it to landlords”.
Faafoi said he believed parties could come to a fair arrangement.
It's estimated that commercial landlords have handed out more than $300 million dollars in rent relief since April last year.
Property Council's Leonie Freeman said people needed to ask whether it was “fair that small mum and dad landlords end up subsidising rent for international retailers that are making huge profits internationally”.
“This is about supporting the businesses that really need it,” she added.
The Government offers the Resurgence Support Payment to businesses struggling to cope under lockdown.
The one-off payment for eligible businesses starts at $1500, with $400 per full-time employee for up to 50 employees - a maximum of $21,500.
There's also growing support for replacing the one-off payments with weekly instalments.
The money can be used for things like rent. But, some businesses say it’s not enough to cover their bills .
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