Commercial lease changes provide criteria for fair rent relief

Written by: Raj Gurusinghe
Nov 18 2021

Rent reduction period extended   

New changes to commercial leases have come into effect which are designed to provide many businesses impacted by the pandemic with rent relief.

An important part of the new legislation was to add a “no access in emergency” term similar to clause 27.5 of the ADLS Lease into leases that do not currently contain this provision.

The final legislation comes with some clarity around how a tenant and landlord can determine what constitutes a fair rent reduction.

As mentioned in our previous analysis of the COVID-19 Response (Management Measures) Legislation Act 2021, this determination was ambiguous and left it for the two parties to decide. This mirrors the position under clause 27.5 which does not include any criteria for determining a fair rent reduction.

However, in response to submissions calling for specific criteria around what amounts to a “fair proportion”, parties are now required to consider any loss of income suffered by the Tenant in making this determination.

Parliament also amended the Effective Date of the rental abatement period from 28 September 2021 to 18 August 2021, which is the date the country most recently moved into Alert Level 4. The practical implication of this amendment is that a tenant can seek a rent reduction for any rental period of inaccessibility after, or including, 18 August 2021.

Additionally, driven by submissions calling for increased engagement between both parties, the Act requires each party to take reasonable steps to respond to a communication from the other within 10 working days.

If you have any questions about the Act and its application to your business, please contact Shaun McGivern on [email protected], Raj Gurusinghe on [email protected] or 09 306 0629