Commercial landlords - what are your thoughts about these sudden changes re Commercial Property leases:

Changes to the Property Law Act to force landlords and tenants to strike deals over lockdown-related rent relief were kept secret until minutes before legislation was introduced to Parliament.
The changes "insert a clause into commercial leases requiring a 'fair proportion' of rent to be paid where a tenant has been unable to fully conduct their business in their premises due to the Covid-19 restrictions," Faafoi said.

Where tenants and landlords cannot agree on the fair proportion, they can go to arbitration. The changes "will send a signal that we want, when there are high alert levels, both landlords and tenants to come to some form of fair arrangements"

proproperty - 2021-09-28 21:50:00

Who defines fair? I get where a tenant has no money coming in the idea that the landlord should also have no income is attractive and considered "fair" by some. However the landlord still has to pay their mortgages, rates, insurance, wages and other outgoings contracts that continue, just as the tenant will have ongoing overheads. Some of the bigger service contracts could have a "force majeure" clause which would help but that definitely doesn't apply to rates, insurance and taxes!
As each subsequent lockdown rolls in everyone's reserves are being depleted, if they still exist, which is going to make parties dig their toes in a bit more firmly as they have nothing to fall back on.
Then you have both sides of the fence who will not move regardless. Several of the large Aussie retail groups instantly stopped any payments as soon as the words "moving to Alert Level 4" were broadcast and haven't budged since. How do you negotiate "fair" with that?

Edited by hers.nz at 10:34 pm, Tue 28 Sep

hers.nz - 2021-09-28 22:33:00

Most open and transparent Government ever.
Yeah, nah.

pcle - 2021-09-29 07:51:00

ADLS Deed of Lease Version 6 already, for nearly a decade, includes such provision effectively. As was much discussed last year. Clause 27.5.

Of course, not everybody uses ADLS 6 Deed, or uses it unmodified, but I would probably imagine that many, if not most, smaller leases do (or the Agreement To Lease which infers the conditions of the Deed from memory).

Larger leases are probably totally bespoke and much less friendly to the tenant than ADLS6 though.

bitsy_boffin - 2021-09-29 12:35:00

Panic stations. Government money running out.

artemis - 2021-09-29 17:29:00

When are the banks being told to inform these commercial landlords that their mortgage payments will be reduced because the landlords tenants are struggling due to covid ?

Are these tenants going to eventually reimburse the landlord for money owed in relation to the original lease once they are back on their feet ?

Edited by houseofdad at 9:51 pm, Wed 29 Sep

houseofdad - 2021-09-29 21:50:00