Mediating Commercial Rent Disputes
Commercial rent disputes have been an ongoing problem since New Zealand’s first lockdown, but just before lockdown 2.0 the Government finally announced how it would try to help.
1 September 2020
Justice Minister Andrew Little says the Government is allocating $40 million towards mediation and arbitration costs for businesses and landlords to resolve rent issues as they face the economic impacts of Covid-19.
The funding is to improve access to arbitration in a timely and cost-effective way, to support small or medium businesses to reach agreement on a fair rent.
It will also cover mediation for commercial landlords and tenants whose leases do not provide for a reduction of rent in the event of an emergency. Little says it is critical that businesses who have not reached an agreement be assisted to find a solution that will help New Zealand recover from the economic impacts of Covid-19.
“This funding will ensure that tenants and landlords, even if financially constrained, will be able to access dispute resolution services.”
Initially, the Government wanted to temporarily amend the Property Law Act to insert a clause in commercial leases requiring a fair reduction in rent where a business had suffered a Covid-19 related loss of revenue.
But New Zealand First did not support that plan, which meant the Government had to go back to the drawing board on the issue. Little says the latest initiative is a good solution that will be of assistance to many small businesses across the country.
“I encourage businesses and landlords to work towards reaching a fair agreement on the payment of rent and using this funding to access mediation and arbitration services if that helps.”
Property Council chief executive Leonie Freeman says the announcement finally closed the lid on the Covid induced rent relief issue for tenants and they are pleased with the outcome.
“With a new lockdown now in place, we continue to encourage landlords and tenants to work together to get through this time - we’ve been here before and know the drill - let’s just get on with keeping people (on both sides of the equation) in business.”