Commercial rent relief available for eligible businesses

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Are you a commercial tenant battling with your landlord who has refused to grant rent relief during lockdown? This mooted temporary law change to the Property Law Act will be of interest to you. Contact us if you need help to advance rent relief discussions with your Landlord or have other COVID19 related lease issues.

Wynyard Wood partner, ARTHUR CHUNG, discusses a proposed temporary change to the Property Law Act.

The mooted change implies a term into commercial leases of eligible businesses requiring landlords and tenants to negotiate a “fair proportion of rent and outgoings cease to be paid” where a tenant has suffered material loss of revenue due to restrictions imposed to combat COVID19.

If you are a commercial tenant still battling with your landlord who has refused to grant rent relief during the lockdown, this law change will be of interest to you. Key details of the new law recently revealed by Justice Minister Andrew Little include:

  • The amendment to the Property Law Act will be effective retrospectively from 4 June and continue for a period of 6 months after the law comes into force.

To be eligible for the implied term, the business must:

  • have 20 or fewer full-time equivalent staff per lease site
    be NZ based, and
  • not have already come to an agreement for rent relief with its landlord.

The implied term will be similar to the “no access in emergency” clause 27.5 in the Sixth Edition ADLS Lease. However, the law will go further by providing guidance as to how parties are to assess what is a “fair proportion” of rent and outgoings reduction. In particular, the implied term will focus on the financial impact of COVID19 restrictions on the tenant’s business:

  • whether or not the tenant was able to access the premises, and during the period in which the COVID19 restrictions were in place as well as the period after those restrictions were lifted.

If parties are unable to reach an agreement, the Government will subsidise arbitration up to $6,000 (including GST) per proceeding.

The wording of the new law is not yet finalised but will hopefully be passed by the time this article is published. If you need help to advance rent relief discussions with your Landlord or have other COVID19 related lease issues, give us a call to discuss.