Labour says commercial rent relief talks continue, but warns not sector not to hold its breath

Finance Minister Grant Robertson said the Government was considering ways to intervene in the commercial property market to offer rent relief due to Covid-19 disruption, but urged tenants not to wait.

Labour's leadership insists it still plans to intervene in the commercial property market to force rent negotiations due to Covid-19 disruption, but warned tenants and landlords not to wait for it.

In April Justice Minister Andrew Little said the Government was considering options to offer rent relief for commercial tenants hit by disruption caused by Covid-19.

But the initial plan appeared to be blocked by New Zealand First which was reluctant to intervene in contracts law, believing many leases already covered the type of situation businesses faced during lockdown.

Labour ministers continue to say this week that the issue is under active consideration, statements which landlords say has caused negotiations with tenants to stall in some cases.

On a day of post-Budget speeches, both Prime Minister Jacinda Ardern and Finance Minister Grant Robertson talked up the amount of negotiations under way, but both indicated work to intervene was continuing.

"I expect that we'll have more to say on that in the near future," Ardern told an event hosted by accountancy firm Grant Thornton.

Ardern also said people wrongly assumed landlords were more powerful than tenants.

"It's often perceived from the perspective, understandably, of the tenant," Ardern said.

"There will be, in many cases, commercial property owners who equally are actually in vulnerable positions themselves."

Robertson stressed that many leases included clauses covering disruption such as Covid-19, but repeated that the Government was looking to possible law changes to intervene.

"We're looking actively at what we do in terms of the Property Act to be able to support a fairer resolution there to ensure there is some remission."

There was "sometimes a bit of a misnomer about the power balance here" with some landlords owning just one or two buildings, while some tenants were multinational companies, Robertson said.

"That actually flips the power balance from what you might automatically assume."

Speaking to reporters afterwards, Robertson directly urged tenants not to wait for the Government to make changes before negotiating.

"No, they shouldn't [wait], they should be doing that [negotiating] immediately, and they have been."

Brent McGregor, executive chairman of CBRE, one of New Zealand's leading commercial property agents, said while there were some exceptions, tenants and landlords had reached agreements over rent agreements following disruption from Covid-19.

"My observation is that landlords and tenants have mostly shown a spirit of co-operation during this challenging time."

But one landlord claimed that while negotiations had taken place with many tenants, since Little's statement about rent relief, negotiations had stalled with others.

"Several of my largest tenants, who are in some cases, multi billion dollar institutions and companies, have stalled negotiations on the basis of some form of forced intervention and are waiting for a statement from the Government to clarify the position," Caniwi Capital executive chairman Troy Bowker said.

The company owns commercial property across New Zealand but mainly in Wellington and Petone.

Retail New Zealand and the Franchise Association warned on Sunday that failure to intervene would cause some businesses to fail.

"The Government's apparent inability to deliver proportional rent relief for commercial tenants will have a significant impact on the survival of many retail businesses," Retail New Zealand chief executive Greg Harford said.

"While some landlords have negotiated fair terms with their tenants, a significant number are playing hardball and threatening eviction or debt recovery action."