Rent arbitration delay hurting businesses

WELLINGTON: One in eight retail businesses is struggling to negotiate rent relief and wants governmentassisted arbitration to help them resolve their plight, the Retail New Zealand survey shows.

The survey, released yesterday, also shows some business owners are being threatened with having guarantees called in, and eviction.

The Government is being accused of ‘‘playing politics’’ as measures announced in June to help tenants and landlords come to terms have still not come into effect.

It was warned to expect a turbulent period for small business owners and employees in the months ahead if no new measures were introduced to help business owners negotiate new terms with their landlords.

‘‘We’re just hoping that something’s going to be announced sooner rather than later, because there’s going to be carnage,’’ Hospitality New Zealand chief executive Julie White said.

‘‘Carnage is going to come, and it’s going to be closures.

‘‘It’s going to be unemployment, and that’s a real concern.’’

The Government announced a plan in June — a fund for which businesses could apply and receive up to $6000 to cover arbitration fees.

However, not a single dollar has been spent since the announcement was made.

Minister of Justice Andrew Little said it was disappointing no consensus had been reached within Cabinet.

The disagreement is between coalition partners New Zealand First and Labour.

While they agreed on the terms in early June, it never made it to Parliament.

It was pulled because NZ First leader and Deputy Prime Minister Winston Peters said the terms of the legislation did not match up to the terms of the agreement.

That has still not been resolved within Cabinet, but Retail New Zealand chief executive Greg Harford said the issue was only becoming more pressing.

‘‘We’ve heard of some businesses that have been threatened with both having guarantees called in, through their banks, and indeed being evicted — not large numbers, but those threats are definitely there.’’

Mr Little hopes an agreement on the fund will be finalised in the coming weeks.

NZ First refused a request for comment.

Both Mr White and Mr Harford agreed the delay is frustrating.

‘‘We’re of the understanding that Minister Little was very keen to help out, but things have got delayed, and it’s our understanding that this is politics,’’ Mr White said.

‘‘We urge all parties, this is not the time to play politics, this is the time to step up.’’

For some affected parties, the idea of arbitration in June had brought some landlords to the discussion table earlier than expected, but Mr Harford said the delay had now led to a weakening resolve.

‘‘When the Government announced they were going to put the arbitration process in place, we saw landlords and tenants getting round the table and beginning negotiations.

‘‘When it became clear from the media that wasn’t proceeding, we did see some landlords take their foot off the pedal and cease negotiations.’’

Leonie Freeman, head of the Property Council which represents commercial landlords, said the uncertainty meant both landlords and tenants were stuck in limbo.

‘‘It’s not clear on who is included. It’s not clear on what the basis of the agreement is.

‘‘It’s not totally clear on whether, if you’ve already made an agreement, whether it has an opportunity to be relitigated.

‘‘So I suppose it just means that some of the small tenants and small landlords are just waiting.’’

She said she did not know what to expect from the new legislation as she had not been consulted on it.

While the majority of landlords had already come to some agreement with tenants, for those who were left, the lack of clarity was not helping with planning for the future.

‘‘What happens in this sort of situation is that it just creates uncertainty, and people, when they are in uncertain times, they don’t make decisions. There’s a lot of people just sitting in limbo,’’ she said.

While the Government remains in a deadlock, there is concern that for some industries arbitration is no longer the answer.

A survey of tourism businesses around the country found 38% still need financial assistance for fixed costs, such as rents and leases.

Tourism Industry Aoteroa chief executive Chris Roberts said they needed money, not arbitration, with their landlords.

‘‘Even with a reduction in the rent, it may still be difficult for that tenant to survive,’’ he said.

‘‘And of course, the landlord has the right to get return on their investment.

‘‘So it’s just not the matter of arbitration, there’s also a very good case for direct government support, for those businesses to make sure they’re still viable.’’

The Government wage subsidy runs out on September 1. — RNZ

❛ We’ve heard of some businesses that have been threatened with both having guarantees called in, through their banks, and indeed being evicted

Retail New Zealand chief executive Greg Harford