The $3.2b small business package no help for commercial property, the Property Council says

Wednesday, 15 April 2020

Property Council chief executive Leonie Freeman says the $3.2b small business support package will not help tenants pay rent.

Owners of commercial property are calling for more financial support from the Government following the announcement of the $3.2 billion package for small to medium businesses.

Property Council chief executive Leonie Freeman said the support package might cushion the blow for small businesses but it was 'unlikely to significantly lessen the impact on New Zealand's $145 billion commercial property sector'.

The council has been lobbying for rent subsidies but the new support package does not provide that but allows tenants more time to catch up on overdue rent and landlords more time to meet mortgage payments.

The immediate problem for many tenants was paying their rent and Freeman questioned whether the package would help tenants do that and met their contractual obligations.

Many landlords are small property owners whose tenants are struggling to pay rent and they are stressed trying to meet mortgage obligations, Freeman says.

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Not all landlords were large and wealthy. Many landlords were small property owners with mortgages and tenants struggling to pay the rent.She had had a lot of phone calls from small landlords.

'There's a lot of stress and a lot of heartache out there.'

The announcements in the new package extending timeframes when landlords could cancel leases and mortgagees could exercise their rights gave more time for landlords and tenants to solve contractual issues.

'However we remain concerned that the risks involved in non-payment of rent could have wider implications for the property industry and the wider economy,' she said.

The Government was taking an holistic approach to supporting the property sector but more support was needed for businesses which occupied tenancies in the next six to 12 months.

The council had proposed a support package to the Government for tenants facing a 50 per cent loss in revenue. It had several components that would have provided immediate relief to tenants in the forms of a deferral of rent and a rent tax credit similar to the wage subsidy.

'Small businesses are struggling to pay rent and in turn mum-and-dad commercial landlords, and in some cases larger property owners, are finding it difficult to meet their mortgage obligations.'

The new package from Government would not stop that happening only give more time before lenders could act, Freeman said.

'Property Council encourages landlords and tenants to take a long term view and continue to negotiate in good faith so that everyone comes out of this with their business intact.'

Members who were developers were telling the council that without more certainty around cashflow they faced having to halt construction on planned projects.

That could have a devastating impact on the property and construction sector with hundreds of thousands of New Zealanders relying on the projects to stay in work and business.