Government rent relief call gets a mixed response

A former business chief wants government rent relief for tenants as a “quite urgent” move, but a big-time commercial and retail landlord says parties should negotiate without state intervention.

Justice Minister Andrew Little said the Government was considering options to support businesses with rent payments.

“While 75 per cent of the economy is up and running again under level 3, we know many businesses, especially our smaller ones, have been hard hit by a drop in revenue and are struggling to meet their fixed costs,” Little said.

“So, to add to the wage subsidy and other support in place, Cabinet

Economic Development Committee ministers discussed options around changing the Property Law Act to support New Zealand businesses in managing their rent.”

Former Business NZ chief executive Phil O’Reilly supports the idea of rent relief, and rejected the notion that business had its hand out for more money. “The wage subsidy was very quick, very good, one of the best in the world. But business has other costs beside that,” he said. “They’ve got rental costs, equipment leases, other bills. That’s what’s killing them right now.

“The danger is you waste a lot of money paying for the wages as a government and then there’s no business to come back to because it’s fallen over. It’s now quite urgent that the Government moves,” O’Reilly told Mike Hosking on Newstalk ZB.

“It really seems strange to me that the Government hasn’t done this. Five weeks on from the lockdown, maybe six weeks, it’s going to have probably thousands of small businesses that will either be mortally crippled or just fall over as a result. I just can’t understand why the Government won’t move on this.”

Others backing a possible rent subsidy scheme are Property Council chief executive Leonie Freeman and Craigs Investments Partners’ Mark Lister.

But Rolf Masfen of Masfen Group — owner of Auckland’s Eastridge shopping centre and many other retail and commercial premises — believes parties should reach rent deals without government involvement.

“Lessees/tenants and lessors/ landlords should come to a reasonable agreement about rental forgiveness during level 3 and 4 lockdown on a case-by-case basis,” Masfen said.

“Given the particular circumstances of each situation, I have done that. There is no rule that fits all. The situation is made far easier on everyone in the community if the Government speedily gets businesses operating again, albeit in a safe manner, as soon as humanly possible.”

Craig Tyson, ANZ’s head of Australasian property securities, said the Property Council had put forward a proposal to the Government a month ago based on tax relief for tenants, which he said had much merit. “We were disappointed that nothing came of it, particularly given the effort that went into the proposal.

“However since then, most proactive landlords have come to an agreement with their tenants and it is quite late in the piece to come up with a new proposal similar to the code of conduct in Australia.

“From what we hear, this proposal is creating frustration for tenants and landlords alike. In any case, we don’t believe that anything that cuts across the fundamentals of contract law is good for the property sector, or any other business for that matter,” Tyson said.

No landlord wanted vacancies, said Tyson, particularly at a time when it would be difficult to find a replacement tenant.