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Govt bypasses legislative change to commercial rent after NZ First disagreement

The Government has taken a side road in addressing businesses struggling to pay rent in the fallout of Covid-19, after NZ First put the brakes on legislative changes last month. 

Source: istock.com

Justice Minister Andrew Little said the $40 million injection to assist with arbitration costs for businesses and landlords, announced in early June, will now also cover mediation to resolve disputes about rent adjustments and will now come into force. NZ First did not support the move. 

The $40 million was originally part of an unsuccessful package to help businesses.

Businesses need to have a maximum of 20 full-time staff at each leased site, be based in New Zealand and have not already come to a rent agreement with the landlord to be able to access the funding. 

"This funding will ensure that tenants and landlords, even if financially constrained, will be able to access dispute resolution services," Mr Little said. 

"New Zealand First do not support the previously proposed legislation and they do not support this action. However, I think we have reached a good solution that will be of assistance to many small business across NZ as they face the ongoing economic effects of Covid-19."

He said Government had previously announced funding to improve access to arbitration for SMEs, but now the funding would also cover mediation for commercial landlords and tenants "whose leases do not provide for a reduction of rent in the event of an emergency".

It has been almost four months since the Government first acknowledged rent and utilities were a big cost for small- and medium-sized businesses during the Covid-19 Alert Level 1 lockdown. 

Initial disagreements saw negotiations stretch out across months, while business owners pleaded with the Government for assistance with paying rent.

On June 4, the Government announced a proposal for a temporary change to commercial leases, adding a clause requiring a fair reduction in rent where a business has suffered a loss of revenue because of Covid-19.

Shortly after, NZ First leader Winston Peters called proposed changes to commercial rent by Labour "poorly targeted", saying his party wanted to alter contract law for all existing lease arrangements.

On June 24, NZ First put the brakes on the proposed law change that was due to be debated that day. 

Mr Little, who was in charge of the proposed changes to commercial leases, said at the time there was consensus with NZ First earlier in June - "apparently this day is different". 

"Why use the word blocking?" Mr Peters said today when asked if his party stopped the proposed changes. "We’re still working on it. That’s why we’re here, to make sure we have policies that are sound and do work."