COVID-19 must now be considered in disputes over commercial rent issues in $40m Government package

A temporary law change will force commercial landlords and renters to consider COVID-19 in disputes over rent issues, almost two months after the Government first floated the idea. 

Justice Minister Andrew Little has announced that a temporary change to the Property Law Act will ensure businesses that suffered as a result of the COVID-19 response will get help to resolve disputes over rent costs. 

The Government is investing $40 million to provide access to arbitration - basically independent dispute settlers - to support small or medium businesses to reach agreement on a fair rent. 

The $40 million will provide a subsidy of up to $6000 per arbitration, meaning in many cases, the Crown will cover about 75 percent of the arbitration cost. 

Business must have 20 or fewer full-time staff at each leased site and be based in New Zealand to be eligible. Businesses and landlords who have already breached agreements in response to COVID-19 cannot access it. 

"I am concerned that some landlords and tenants are not coming together to make agreements that reflect the seriousness and uniqueness of COVID-19," Little said on Thursday. 

He said he's become aware of "behaviour where large commercial tenants refuse to pay rent and landlords demanding rent from small retailers who haven't been able to operate". 

"The changes will apply from today, and I encourage businesses and landlords to work towards reaching a fair agreement on the payment of rent."

Little first floated the idea of rent concessions to ease the burden from COVID-19 on small businesses back in April, but at the time ruled out rent subsidies or freezes.

It's understood commercial rent relief was held up by the Government's coalition partner New Zealand First, who have expressed caution about the Government interfering in contract negotiations. 

Business New Zealand chief executive Kirk Hope has backed a code of conduct to force landlords and renters facing financial difficulties to negotiate.

Little said the package will ensure businesses that are "facing a severe loss of revenue, through no fault of their own, as a result of COVID-19" will have "some certainty around commercial rent agreements". 

The Government has helped businesses through COVID-19 by spending around $11 billion subsidising wages, providing temporarily interest-free loans, and tweaking the tax system to provide financial relief.