Against the advice of property experts, the Government will be proceeding with the planned changes to the Property Law Act – inserting a no-access clause into commercial leases
By Leonie Freeman – Property Council New Zealand Chief Executive
This move completely undermines the sanctity of commercial contracts by inserting a clause into every commercial lease in the country that neither tenant nor landlord has agreed to. It shows Wellington hasn’t listened to people on the ground.
Despite significant feedback from landlords, tenants, lawyers and property experts on the effectiveness of the clause, the Government has made no change that will support vulnerable tenants and landlords.
Speaking to our lawyer members, I am told that no one will benefit from this decision, with one commercial lawyer saying they have had very little if any, requests for assistance with lease contracts since last year’s lockdown. I believe his exact words were “they’re solving a problem that no longer exists”.
Meanwhile, many of our property owner members are reporting instances of large, Australian-based tenants saying they will not be paying any rent at all over these trying months. Some of these tenants have a significant online presence, are still able to operate and have reported good profits over the past year.
It is difficult not to be moved by the stories of property owners in strife, and while we certainly knocked on every door, pulled every lever and outlined the issues clearly and succinctly, it appears our appeals for clarity and consideration fell on deaf ears.
By the Government’s own admission that they don’t know the size and scale of the problem. Their approach of taking a sledgehammer to a nut does nothing to solve the root cause of the problem – cashflow.
Almost all the submissions recommended better financial support for tenants and landlords, noting even deferrals or abatements wouldn’t fix the problem.
We put forward practical solutions to help improve the clause. We promoted ideas that would stop major multi-national companies from seeking rent relief, and instead helping target the need to those who desperately need it.
Officials in Wellington might say it’s too hard to do, but that’s a classic Wellington state of mind. Those of us on the ground offered our expertise from both landlord and tenant perspectives – sadly that fell on deaf ears. As has every offer we have provided to help the Government come to a workable solution.
The team of five million works when we are fixing problems together. Pitting landlords and tenants against each other like this only serves to cause more strain and hardship when New Zealanders right across the country are doing it tough.
This decision will do nothing to help the retired couple who contacted me, whose only income is their pension and the rent from their small commercial property.
Their professional tenants have stopped paying their rent, despite their business suffering no financial stress due to lockdown. This couple simply cannot afford a rent reduction, nor can they afford to drag the issue through arbitration in the tens of thousands.
What does the Government propose they do? How will this legislation support people like them?
It’s another great day for lawyers and for multi-nationals – but another sad day for vulnerable tenants and landlords across New Zealand.
