Tenants at one of Wellington's largest malls say the new government policy on arbitration has arrived in the nick of time, with many worried an ongoing disagreement with their landlord would see them in court, or bankrupt.
Some businesses have gone under due to Covid-19 and the long time it has taken to introduce a rent arbitration process, one industry group says. Photo: 123RF
Managing director of the Acquisitions home and giftware chain Richard Thomson said the arbitration was a welcome "peace of mind".
"Now we're in a position where we can genuinely negotiate knowing that if we can't get agreement then there is an arbitration process, whereas at the moment the landlord can say 'take what we're offering you, and if you don't like it we can take your house'."
A group of tenants at North City in Porirua refused to pay rent during the alert level 3 and 4 lockdown until a deal was struck.
Thomson said banding together for support was important, particularly for smaller tenants.
"It gave those tenants who are only in that one situation, they've got no experience of what's happening elsewhere. They've got no idea if whether they hold out they're the only one and so by working in a group they were able to get the confidence to hang on and say no to deals that were unfair or unreasonable."
North City is owned by the Australian rich lister Nick DiMauro's company, Angaet Holdings. The company also owns Westcity Waitākere in Auckland.
The tenants were offered either a 50 percent rent abatement for April and May so long as a 12-month lease extension was agreed to, or a 50 percent rent deferral without the extension.
However the businesses, some of which already had years left on their leases, were nervous to extend, given trading uncertainty and could not afford the deal on the table, given the harsh downturn in revenue.
They were also warned if full payments for June were not made they risked legal action or the landlord drawing on any securities held.
Thomson said most landlords he had dealt with had been fair.
"We've got 20 landlords across the country and the majority of them have acted extremely fairly and in some cases very proactively and I've got no general criticism.
"But there is a small group who have either refused to engage or have been quite happy to stand on the shoulders of those other landlords who have helped assist us."
He said the temporary law change would have been more helpful earlier on.
"There will be tenants and probably landlords who have agreed terms that they might not have wished to agree... but it is what it is, however, it's regrettable some people have missed out on that opportunity but it's better than nothing."
Industry group wanted faster government response
The Franchise Association (FANZ) along with other industry groups including Retail NZ had been calling on the government since the lockdown began to take the lead on the issue of commercial rents.
FANZ chief executive Robyn Pickerill agreed something was better than nothing.
"It's hard to say whether it's enough at this stage but we are glad something's through... it's been a long time coming.
"We are disappointed it has taken so long as it's been stressful for lots of people and there's definitely businesses that have gone under in the meantime and that's really disappointing because potentially that could have been avoided."
Retail NZ chief executive Greg Harford agreed it was a good start but wanted the policy extended to all businesses not just those with 20 staff or fewer.
Meanwhile, the Property Council said the majority of tenants and landlords had already some to an agreement so the policy was largely redundant.
Chief executive Leonie Freeman said the arbitration component may be helpful for those who had not yet concluded negotiations but it was disappointing it had been announced with little industry consultation.
She said a straight rent relief package earlier in the piece would have been more helpful.
Read more about the Covid-19 coronavirus:
- See all RNZ Covid-19 news
- Covid-19 symptoms: What they are and how they make you feel
- Your Covid-19 questions answered - from health and employment to managing anxiety
- A timeline: How the coronavirus started, spread and stalled life in New Zealand
- Coronavirus: A glossary of terms
- Podcast: After the Virus