Concerns Over Government’s Intervention In Commercial Leases

The New Zealand Council of Retail Property, which represents many of New Zealand’s largest retail property owners, has voiced its concern over the Government’s proposal to intervene in the industries contractual relationships.

Chair Campbell Barbour says “the Government’s proposal comes far too late after the industry has largely got on with the job of coming to individually negotiated positions over recent months.

“We are concerned that the industry now faces a protracted government imposed and funded arbitration process to amend commercial contracts when our collective interests should be getting back to the difficult business of retail.

“Our sector went to government early with a proposal to assist the industry to manage through the lockdown period, which involved sharing the burden between property owners and tenants. The Government has failed to respond, instead offering now, months later, to fund disputes.

“We are not aware of any other industry sector where the Government has decided to alter contracts between commercial parties, property owners haven’t been provided a mechanism to arbitrate to reduce their interest with the bank or the rates on their property with the council.

“To legislate to retrospectively alter contractual provisions in this way is unchartered territory in New Zealand. The sanctity of commercial contracts is a cornerstone of our country’s legal system.

“While we understand the Government is trying to provide a pathway to arbitration for those tenants and landlords who are yet to come to an agreement on rent relief, this proposal is fraught with difficulties”, says Barbour.

“We have concerns surrounding the definitions within the proposal which we understand to be tightly focused on small New Zealand businesses,

“While a business with 20 full time equivalent employees or less might be a small office, in retail – a sector made up of largely part time employees – a single store with less than 20 full time staff encompasses nearly all retail tenants.

“The industry needs more clarity on what constitutes a ‘New Zealand based business’ and how long landlords would be expected to provide relief to commercial tenants.

“We are not aware of any consultation with our industry surrounding the proposal and reconfirm that our door is open to government with regards to refining it.”

“Our members implore the Government to work with the property sector to ensure the legislation will achieve its intended purpose and target small businesses”, says Barbour.

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