The government has announced a $40 million package to support small businesses with commercial rent disputes as a result of the the covid-19 response.
Minister of Justice Andrew Little said the package will help businesses with 20 or fewer full-time staff access arbitration in "a timely and cost-effective way," to agree on fair rent.
The package will provide a subsidy of up to $6,000 per arbitration, or up to 75 percent of the arbitration costs.
In April, the government signalled it was prepared to step in if necessary to help businesses hardest hit by the lockdown, helping drive lease holidays or deferrals with their landlords.
A temporary amendment will be made to the Property Law Act to facilitate the mechanism, meaning commercial leases will require "a fair reduction in rent where a business has suffered a loss of revenue because of covid-19."
The changes will apply from today, Little said, adding that he was concerned some landlords and tenants "are not coming together to make agreements that reflect the seriousness and uniqueness of covid-19.
"This includes behaviour where large commercial tenants refuse to pay rent, and landlords demanding rent from small retailers who haven’t been able to operate."
Be fair
He said fairness was required. “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 needs to have 20 or fewer full-time staff at each leased site and be New Zealand based.
Where businesses and landlords have already reached an agreement, they will not be able to use the new process.
Little said the package will provide guidance on applying the implied clause on a ‘fair proportion’ of rent and also requires that disputes about the implied clause be settled through a compulsory arbitration process in a timely and cost-effective way.
Legislation for the scheme has yet to be drafted, but will be retrospective so that it applies from today. It will last for six months.
