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Coronavirus: Restaurants, retailers and businesses ask for lease help from Government
Rob Stock14:59, Apr 24 2020
7-8 minutes
ROSD GIBLIN/STUFF
A group of business groups including Retail NZ says many businesses hadn't been able to secure meaningful rent and outgoings relief from landlords.
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Many businesses, including retailers, face financial doom even after the country comes out of lockdown because they are locked into unaffordable rents, a coalition of business groups has told Prime Minister Jacinda Ardern.
The groups, which have published an open letter to Ardern, also reveal unsympathetic emails sent to businesses from commercial landlords, including one demanding interest of 10 per cent on unpaid rent.
The group of business groups, including Retail NZ, said many businesses had not been able to secure meaningful rent and outgoings relief from their landlords.
ROBERT CHARLES/STUFF
"Many thousands of small businesses are now at risk of closure and job losses unless the Government acts urgently to require commercial landlords to come to the party," said Greg Harford from Retail NZ.
Property Council chief executive Leonie Freeman called the open letter "inflammatory and out of context".
READ MORE:
* Landlords challenged to offer their rentals to essential workers for free
* Government tells landlords to step up with rent relief
* Coronavirus: Bringing back depreciation of commercial buildings
The eight industry groups behind the open letter called on the Government to urgently increase protection for commercial tenants in the face of rents that are now "completely unaffordable" and now posed a serious threat of causing business failures and job losses.
They called for an immediate six-month moratorium on lease cancellations and debt recovery action by landlords for commercial tenants whose businesses were eligible for payments under the Wage Subsidy scheme.
They also wanted long-term change, with a legally-binding mandatory code of conduct for commercial leasing to be created setting "a level playing field in landlord and tenant negotiations for fair and proportionate relief from rents linked to turnover".
Greg Harford of Retail NZ said the risk of eviction was now a part of everyday life for thousands of New Zealand small business employers.
"Nearly four weeks into Level 4, and with at least three more weeks of trading restrictions ahead, many thousands of small businesses are now at risk of closure and job losses unless the Government acts urgently to require commercial landlords to come to the party.
"We applaud the government for its response to Covid-19 which gives New Zealand the best possible chance of recovery.
"The Wage Subsidy is a genuine lifeline which will preserve businesses and protect jobs while other significant measures are keeping the lights on in the economy."
But, he said: "But without action on rent and leasing costs, all of this could be brought to nothing: many businesses are facing possible eviction and costs.
"If nothing is done, the effect will be to drive businesses from their operating locations, impacting jobs and communities for many years to come."
Freeman said: "It is disappointing that a group of entities that we have previously had strong partnerships with has elected to release a letter that effectively pits one sector against another.
"At the moment, everyone is hurting, and we have a responsibility as property and business owners to work together and share the necessary pain.
"Our concern is that the letter merely addresses a symptom of the wider disease; a lack of cashflow. These are uncertain times and people are understandably afraid of losing their livelihoods. This is true for retailers, business owners and property owners alike."
She said the vast majority of property owners and tenants had chosen to act responsibly, with their contractual obligations merely forming a starting point for negotiations that serve both parties.
The letter to Ardern claimed though many landlords had been supportive of their tenants, some had not.
It quoted from one communication to a tenant from their landlord who had refused any form of rent relief and was increasing the rent: "Rent is now 20 days in arrears. We are disappointed that you have chosen this route and formally advise that under clause 5.1 of the lease we now require interest at the default rate of 10 per cent p.a. as per point 12 of the First Schedule to be paid in addition to the outstanding rent."
SUPPLIED
Some commercial landlords are refusing to offer meaningful rent reductions despite the impacts of Covid-19 lockdowns on businesses like retailers and restaurants.
The open letter to Ardern read: "SME commercial tenants are highly vulnerable as a result of the pandemic. This issue is a "ticking bomb" – many SMEs will not be able to survive seven weeks of Level 4 and Level 3 restrictions without rent relief."
Few leases contained the requirement for a fair rent reduction under current circumstances, the letter said.
"Government can provide meaningful assistance, without incurring further expenditure, by implementing the above two proposals. If the Government truly believes that "He Waka eke noa - we are all in this together" then we implore you to take decisive action now to ensure a fair allocation of the risks and to protect jobs," it said.
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The organisations behind the letter were Retail NZ, Franchise Association of New Zealand, Hospitality New Zealand, the Restaurant Association, the Auckland Business Chamber, the Baking Industry Association of New Zealand, and the EMA.
Adrian Chisholm, founder of New Zealand-wide business TourismProperties.com, said landlords and businesses need to work together in good faith to help stem the tide of closures and redundancies.
"Without a tenant paying rent or outgoings to cover rates and insurance premiums, there's significant income disruption and potentially a prolonged period of vacancy."
Landlords should be under no illusion that if good tenants fell over, there would be a queue of prospective occupiers.
"There's merit in the argument that some rent is better than losing a good tenant and the prospect of no rent at all, and other options include Government-sanctioned bank loans which require approved cashflow statements and business plans which are currently nearly impossible to establish," he said.
"What's required is an open book process where the tenant pays an adjusting percentage rent to turnover
Stuff
Coronavirus: Restaurants, retailers and businesses ask for lease help from Government
Rob Stock14:59, Apr 24 2020
7-8 minutes
ROSD GIBLIN/STUFF
A group of business groups including Retail NZ says many businesses hadn't been able to secure meaningful rent and outgoings relief from landlords.
Trustworthy, accurate and reliable news stories are more important now than ever. Support our newsrooms by making a contribution.
Many businesses, including retailers, face financial doom even after the country comes out of lockdown because they are locked into unaffordable rents, a coalition of business groups has told Prime Minister Jacinda Ardern.
The groups, which have published an open letter to Ardern, also reveal unsympathetic emails sent to businesses from commercial landlords, including one demanding interest of 10 per cent on unpaid rent.
The group of business groups, including Retail NZ, said many businesses had not been able to secure meaningful rent and outgoings relief from their landlords.
ROBERT CHARLES/STUFF
"Many thousands of small businesses are now at risk of closure and job losses unless the Government acts urgently to require commercial landlords to come to the party," said Greg Harford from Retail NZ.
Property Council chief executive Leonie Freeman called the open letter "inflammatory and out of context".
READ MORE:
* Landlords challenged to offer their rentals to essential workers for free
* Government tells landlords to step up with rent relief
* Coronavirus: Bringing back depreciation of commercial buildings
The eight industry groups behind the open letter called on the Government to urgently increase protection for commercial tenants in the face of rents that are now "completely unaffordable" and now posed a serious threat of causing business failures and job losses.
They called for an immediate six-month moratorium on lease cancellations and debt recovery action by landlords for commercial tenants whose businesses were eligible for payments under the Wage Subsidy scheme.
They also wanted long-term change, with a legally-binding mandatory code of conduct for commercial leasing to be created setting "a level playing field in landlord and tenant negotiations for fair and proportionate relief from rents linked to turnover".
Greg Harford of Retail NZ said the risk of eviction was now a part of everyday life for thousands of New Zealand small business employers.
"Nearly four weeks into Level 4, and with at least three more weeks of trading restrictions ahead, many thousands of small businesses are now at risk of closure and job losses unless the Government acts urgently to require commercial landlords to come to the party.
"We applaud the government for its response to Covid-19 which gives New Zealand the best possible chance of recovery.
"The Wage Subsidy is a genuine lifeline which will preserve businesses and protect jobs while other significant measures are keeping the lights on in the economy."
But, he said: "But without action on rent and leasing costs, all of this could be brought to nothing: many businesses are facing possible eviction and costs.
"If nothing is done, the effect will be to drive businesses from their operating locations, impacting jobs and communities for many years to come."
Freeman said: "It is disappointing that a group of entities that we have previously had strong partnerships with has elected to release a letter that effectively pits one sector against another.
"At the moment, everyone is hurting, and we have a responsibility as property and business owners to work together and share the necessary pain.
"Our concern is that the letter merely addresses a symptom of the wider disease; a lack of cashflow. These are uncertain times and people are understandably afraid of losing their livelihoods. This is true for retailers, business owners and property owners alike."
She said the vast majority of property owners and tenants had chosen to act responsibly, with their contractual obligations merely forming a starting point for negotiations that serve both parties.
The letter to Ardern claimed though many landlords had been supportive of their tenants, some had not.
It quoted from one communication to a tenant from their landlord who had refused any form of rent relief and was increasing the rent: "Rent is now 20 days in arrears. We are disappointed that you have chosen this route and formally advise that under clause 5.1 of the lease we now require interest at the default rate of 10 per cent p.a. as per point 12 of the First Schedule to be paid in addition to the outstanding rent."
SUPPLIED
Some commercial landlords are refusing to offer meaningful rent reductions despite the impacts of Covid-19 lockdowns on businesses like retailers and restaurants.
The open letter to Ardern read: "SME commercial tenants are highly vulnerable as a result of the pandemic. This issue is a "ticking bomb" – many SMEs will not be able to survive seven weeks of Level 4 and Level 3 restrictions without rent relief."
Few leases contained the requirement for a fair rent reduction under current circumstances, the letter said.
"Government can provide meaningful assistance, without incurring further expenditure, by implementing the above two proposals. If the Government truly believes that "He Waka eke noa - we are all in this together" then we implore you to take decisive action now to ensure a fair allocation of the risks and to protect jobs," it said.
Become a Stuff supporter today for as little as $1 to help our local news teams bring you reliable, independent news you can trust.
The organisations behind the letter were Retail NZ, Franchise Association of New Zealand, Hospitality New Zealand, the Restaurant Association, the Auckland Business Chamber, the Baking Industry Association of New Zealand, and the EMA.
Adrian Chisholm, founder of New Zealand-wide business TourismProperties.com, said landlords and businesses need to work together in good faith to help stem the tide of closures and redundancies.
"Without a tenant paying rent or outgoings to cover rates and insurance premiums, there's significant income disruption and potentially a prolonged period of vacancy."
Landlords should be under no illusion that if good tenants fell over, there would be a queue of prospective occupiers.
"There's merit in the argument that some rent is better than losing a good tenant and the prospect of no rent at all, and other options include Government-sanctioned bank loans which require approved cashflow statements and business plans which are currently nearly impossible to establish," he said.
"What's required is an open book process where the tenant pays an adjusting percentage rent to turnover
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