Operational Guidelines for Determining a Fair Proportion of Rent

Introduction

The COVID-19 Response (Management Measures) Legislation Act 2021 (Act) received Royal Assent on 2 November 2021 and is now in force. This Act amends the Property Law Act 2007 (PLA) to imply a rent and outgoings abatement term (similar to clause 27.5 of the ADLS lease) into leases that currently do not contain that clause.

These Draft Guidelines have been compiled by Property Council New Zealand with input from landlords and tenants and are published on 18 November 2021. This information may be updated based on further feedback from the property industry, and when new Orders are released under the COVID-19 Protection Framework.

Purpose

The Act provides that a “fair proportion” of rent and outgoings will cease to be payable when there is an “epidemic”, and the tenant is “unable to gain access to all or any part of the leased premises …… but provides limited guidance on how the reduction will be determined. There is no guidance from the Courts as to how to assess what is fair, as any disputes about clause 27.5 have required the parties to submit the dispute to arbitration, which is a private dispute resolution process.

The purpose of these Guidelines is to assist tenants, landlords and arbitrators in resolving disputes regarding “fair proportion” rent reductions applicable to periods of lockdown.

Disclaimer

Persons availing themselves of these Operational Guidelines do so in reliance on their own interpretation and Property Council New Zealand (including their officers, representatives and/or agents) does not accept any liability to any persons so acting.

Download the Guidelines

Download Property Council's Draft Industry Operational Guidelines below.

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