Small Auckland gym owner facing 51 per cent proposed rent hike

An Auckland gym owner is upset at the prospect of a 51 per cent rent increase, but the landlord says they're open to negotiate. Photo / Warren Buckland

An Auckland gym owner is facing 51 per cent hike in rent and says if it goes ahead it will cripple her business.

The woman, who doesn't want either the gym or herself named, says she's been battling her landlord, a company with a large portfolio of companies, about the rate hike since first being given notice in April.

However, a co-director of the company says they're happy to negotiate a better deal, have offered free rent during the two lockdowns and were currently awaiting a second, independent market valuation of the building.

The woman's situation was uncovered during a survey by Exercise NZ of gym owners around the country and how they were coping during the Covid-19 epidemic.

Chief executive Richard Beddie labelled the landlord's move as not only "unreasonable" but "predatory behaviour in the current economic climate".

The woman says the company was basing its rent increase on its new market valuation, however she had got her own valuation which proposed no hike at all.

She said she met with them in July, "but they're just ruthless".

"They say they care but they don't, they don't have any understanding and seem to think legally they can so they are ... so despite what the Government has said about sharing the burden, they just say 'no'."

Her gym had been closed for both the March and August lockdowns, which meant members not having to pay their fees or axing their membership altogether.

"I just couldn't believe it. I thought surely as time went on with Covid problems and being closed for nine and a half weeks ... I thought they would have backed off but they haven't.

"This has taken its toll on me, quite harshly. It has been going on for four months now and I've been fighting it and am still fighting it.

"It's the only business I own, it's just me and I have about six employees. We're a good average sized gym.

"I had a rent review due on April 1 and they served me a rent increase notice. They didn't say 51 per cent in it, but the amount is 51 per cent more than what it was.

She said the situation was a "power imbalance".

"I'm the little guy, they're the big guys and they're just doing what they can."

The gym was the largest space in a complex with eight other tenants.

However, the landlord said they hadn't charged the gym any rent while it had been closed due to Covid-19.

"We've got 10 gyms in our portfolio and we've given all of them rent relief.

"But this has got nothing to do with Covid ... what she's got in her lease is a market rent review. So we have to, as a landlord, get a valuer to assess what the market rental is and it happens that the value we've got was 51 per cent more than her current rent.

"She's gone and got a valuer but we've gone and got a second valuer ... and then they're all going to sit down and sort it out ... but it's not up to us to decide what the rent is."

He said despite that, the company was happy to sit down and negotiate a rate but the woman refused to budge any higher than a single figures rent increase.

"We're not saying it has to be that, but we're just saying that's what the valuer's assessed it. It's an independent professional valuer, it's not us."

The company was also preparing to carry out renovations at the complex which the rent would help pay for.

"We're in a difficult spot because it's a new relationship. We want to do right by her but at the same time I've given her lots of options and said we can delay it until next year when things are recovered but, we have to talk about it.

"We have 180 tenants under management, I've been doing this 20 years and we've never been to arbitration and we've never not been able to resolve these.

"This is as difficult a situation I have ever been involved with."

Beddie said he did a survey of its members earlier this year and about 50 per cent had received immediate relief.

"Another 25 per cent were in negotiations. We found about a quarter just don't do anything."