last updated 02/11/2021
Rent relief support measures refined
last updated 02/11/2021
28 October 2021 – Changes in the way rent relief measures will be applied should provide additional clarity and options for tenants and landlords affected by Alert Level restrictions
The Minister of Justice Kris Faafoi says Government has landed on a balanced package of changes to improve rent relief measures for both landlords and tenants hit by COVID-19 restrictions.
In a press release, he advises, 'Businesses in the Auckland region, and elsewhere under Covid Alert Level Three, have been doing it tough, and the Government has been responding with support in various ways.'
'The measures we are introducing around rent relief as part of the Covid-19 Response (Management Measures) Legislation Bill will offer more support measures, particularly for small to medium sized businesses hit hard by the restrictions that have been needed to contain Covid-19.
'We are aware that many lease agreements already have provision for adjusted rent payments during an epidemic emergency, and many landlords and tenants have been able to negotiate agreed rent relief terms between themselves as a result of previous lockdowns.
'In providing this support, we are also incorporating changes suggested by landlords and tenants to the Finance and Expenditure Select Committee. The changes will provide additional clarity and options for landlords and tenants to agree a fair proportion of rent to be paid where COVID restrictions have impacted a business’s ability to operate,' Kris Faafoi said.
The changes introduced to the Bill will include a requirement to consider a commercial tenant’s loss of income in determining what a ‘fair proportion’ of rent relief would be.
'This change protects against the new rent relief provisions being used where a commercial tenant has not actually had any serious loss of income as a result of lockdown restrictions because, for instance, they have been able to continue operating from home.'
Other changes include:
- A requirement that the parties to a commercial lease with this implied clause must respond to each other within 10 working days of communication about the clause.
- Clarifying that parties may seek to resolve disputes through mediation or other forms of alternative dispute resolution before a referral to arbitration, and that the Disputes Tribunal’s jurisdiction is not excluded as an option.
- Making the changes apply retrospectively from 18 August 2021, being the first day of the current Covid-19 Delta higher alert level restrictions.
'Applying these measures from 18 August means businesses which have suffered serious loss of income due to the recent Delta alert restrictions will be able to access help to agree fair rent relief,' Kris Faafoi said.
'These new provisions will only apply to leases which do not already provide for adjusted rent payment terms during an epidemic emergency to ensure, in particular, that small businesses get the relief they need when Covid-19 response restrictions prevent them being able to access their premises.
The commercial rent relief changes add to the other Covid-19 business support measures the Government has implemented, such as the wage subsidy, an increase to the Resurgence Support payment scheme, and funding for business advice and mental health support.
Paul Turner of Goodwin Turner Commercial Lawyers comments on 5 keys aspects of the rent relief measures and what they could mean for affected franchisees, including dispute resolution options, the definition of 'fair' and how to justify claims, and how to activate the 10-day timeframe.
Franchise Association welcomes response
Robyn Pickerill, CEO of the Franchise Association, says FANZ and many other organisations and individual businesses including Retail NZ, Hospitality NZ, Restaurant Association, EMA, Business NZ, the Auckland Chamber of Commerce and other chambers have been battling since the commencement of Covid-19 in 2020 to achieve a fair negotiating table for lease concerns.
'I would like to thank our FANZ Advocacy Legal Team of Darryl King, Deirdre Watson and Michael Bright for their many hours of input to write substantial submissions, as well as the many other advocacy team members who provided valuable input. I also thank all our members who supported surveys, discussions, and sent in their own submissions. It really does go to show that collective voice can make a difference and that Industry Associations play an important part in getting messages across.
'I sincerely hope that for all those, particularly in retail and hospitality, who have been struggling with rent relief, this legislation assists franchisors and franchisees to achieve fair results as they move ahead. FANZ will continue to do what we can to add our voice to any key concerns.'
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