Finance Minister Grant Robertson has ruled out revisiting commercial rent relief after a small business owner pleaded for help from the Government in an open letter.
The anonymous small business owner wrote to Prime Minister Jacinda Ardern in an open letter published by The Spinoff, asking if she would reconsider amending the Property Law Act to help businesses struggling after COVID-19 lockdowns.
The previous Coalition Government considered earlier this year amending the law to reflect the challenges of the pandemic, and require commercial tenants and their landlords to work together to find a solution and share the financial burden.
NZ First issued caution about the Government interfering in contract negotiations, and leader Winston Peters spoke out against Labour's "poorly targeted" proposal. It led to a watered-down $40 million voluntary dispute mediation scheme.
"It's been a really challenging year for a lot of people and I absolutely accept that. But I don't think we can retrospectively go back now on that," Robertson told reporters on Wednesday.
The small business owner is pleading with the Government to reconsider.
"The only help that was made available was an extension on lease termination notice periods and a voluntary mediation subsidy - a useless tool in our case because our landlord does not want to mediate," the letter reads.
"Now that NZ First is no longer in your Government, we are asking you to urgently review and implement those initial amendments to the Property Law Act as Australia has done - requiring the financial burden of this crisis to be shared equally between tenants and landlords."
Australia's code of conduct specifically states: "Landlords must not terminate leases due to non-payment of rent during the COVID-19 pandemic period (or reasonable subsequent recovery period)."
The business owner suggests: "At the very least, it should place a limit on personal guarantees so that a landlord cannot sue a small business owner for the full term of their lease."
The business owner explained how the first lockdown in April and March, followed by the August lockdown in Auckland, led to huge loss of revenue and their CBD landlord has not been cooperative.
"Because I have been unable to pay my full rent for the past six months - due to the lockdowns and low foot traffic caused by construction in the CBD - my landlord has locked me out of my business and is launching legal action to come after me for everything they can get.
"It all comes down to the personal guarantee clause in my lease, which says if I don't or can't meet my obligations, the landlord can take legal action to recoup the value of unpaid rent for the remainder of the lease term - in my case two years."
It's a common clause in commercial leases to protect landlords from making a loss due to an unreliable tenant, the business owner explains. But there's nothing that allows for unprecedented events like a pandemic.
The business owner made the most of the Government's assistance, including the mortgage holiday scheme. They also borrowed $50,000 from the bank to pay debts and staff. But the second Auckland lockdown forced the business to close.
Business New Zealand chief executive Kirk Hope earlier this year backed a code of conduct similar to Australia's to force landlords and renters facing financial difficulties to negotiate.
"If the business isn't there the landlord simply doesn't get the rent, and that's probably a case no one really wants."
Robertson said the Government has tried to ease the burden on small businesses via the $13 billion wage subsidy scheme and the Small Business Cashflow Scheme which Labour is extending for three years.
By the first week of September, around 94,500 small businesses - most of them micro-businesses employing five or fewer staff - had borrowed almost $1.6 billion under the scheme. The average loan was around $16,500.
Robertson said if another lockdown is required the Government will consider commercial rent relief now that NZ First is out of the picture but he has no plans to revisit what's currently available in the meantime.
"Obviously it was a situation where people couldn't get into their premises and obviously if we ever return to that situation we'd want to be in a position to do more than we were able to do in the last Government," he said.
"What we are saying though is should we ever return to a situation where people couldn't enter their premises, we do believe we should be able to do more there."
