The boss of one of New Zealand's top office building owners says emergency measures to force rent relief to anyone unable to enter their commercial space will mean it can offer less support to businesses that need it.
On Wednesday the Finance and Expenditure Select Committee heard submissions on changes to the Property Law Act made as part of Covid measures legislation.
As it is currently drafted, the legislation would require landlords to offer a "fair proportion" of rent relief to tenants in commercial leases that are unable to fully conduct their business in their premises due to the Covid-19 restrictions.
Appearing in his capacity as chairman of the Property Council, Scott Pritchard who is chief executive of Precinct Properties, said the NZX-listed company had a large number of small, "thinly capitalised" New Zealand-based fashion retailers, in particular in its Commercial Bay retail precinct.
Many of which had been offered 100 per cent relief, irrespective of whether the lease on the space had a clause covering what happened in the event they were unable to access it.
"We target our support to those who need it. That's the baseline approach and that is provided whether they have an inaccessibility clause or not. That's our approach and, generally, that's the approach of the industry," Pritchard told the Herald afterwards.
"If we are forced into a situation where we are forced to offer relief to those who don't need it, on a blanket approach, then we won't be able to support those businesses who don't have accessibility clauses. It's not as if landlords don't have their own financial obligations."
Precinct describes itself as the largest owner of premium office space in Auckland and Wellington. It recently purchased Bowen House in Wellington, which was home to a large number of MPs' offices.
The Property Council has said a law change requiring rent relief is not needed, but if the Government does make changes, relief should be targeted to businesses that need it, rather than all businesses which cannot enter their premises due to lockdown.
While the Government's failed attempts to legislate for commercial rent relief in 2020 included conditions on who could qualify, this year's proposals would be available to anyone, Pritchard said.
"The issue with this bill is that the only eligibility criteria is whether you can access your premises or not. It's got nothing to do with loss or hardship and that's where the focus has to be."
It was inevitable that businesses that had not suffered losses would seek relief.
"We have seen many instances of occupiers that haven't suffered loss, certainly not to the extent that you need to be able to receive the wage subsidy, that have sought material relief from us, even without accessibility clauses," Pritchard said.
"So if this bill goes through in its current form, there will absolutely be businesses that have not suffered loss but will seek relief and we don't think that's fair."
Precinct, which Pritchard said was "largely" owned by KiwiSaver funds and retail investors, would end up subsidising professional services and law firms.
"Corporate New Zealand, generally, are not suffering loss due to not being able to access their premises."
Pritchard said the relief would even apply to leases signed since Covid-19 first emerged where tenants had agreed to have no clause related accessibility in the event of a lockdown, even though they were well aware it was a possibility.
Of the 55 leases signed since May 2020, only 16 had required the clauses.
"You've got well informed, willing landlords and a willing tenant, negotiating, and two thirds that we've entered into new leases with, didn't need it," Pritchard said.
"But the government feels like they need it and that's the oddity of this."
Retail NZ chief executive Greg Harford said he understood there were still "hundreds" of unresolved disputes between landlords and tenants over rent relief related to Covid lockdowns.
"It's certainly true that some landlords have been willing to negotiate reasonable terms … but there is a large minority of cases, we think it's around half of the situations, where rent relief has been sought, where the cases are unresolved, where the parties have not been able to agree on some form of rent relief," Harford said.
This was in the context of a retail sector that was "on the brink of disaster" with the latest Retail NZ survey finding one third of retailers were not confident they would survive the next 12 months.