This page is designed to provide members with the latest update on the unfolding COVID-19 situation. As you are aware, this is an unprecedented time, with announcements and updates changing daily if not hourly. Content will be updated as the situation evolves.
UPDATED: 2 April 2020
Tenants, landlords and the “no access” clause of confusion
We are fielding a number of enquiries about the implications of ‘no access emergency’ clauses in commercial leases (particularly Clause 27.5 and 27.6 of ADLS Sixth Edition). Our ongoing recommendation is that landlords and tenants negotiate in good faith so that everyone comes out of this with their business intact.
As every lease is individual and the position of every landlord and tenant is individual, there is no simple tool or fix that we can recommend for one and all. Property owners must speak to their legal representative on this matter.
Our focus at Property Council remains on working constructively with Government on behalf of our members through this extremely difficult time. On Monday we presented a proposal to government which outlined options for a potential landlord and tenant subsidy. As yet, these recommendations are confidential while we give the Government the necessary space to consider their options and formulate a response.
What we can tell you is that we have worked under the guiding principle that Government, landlords and business tenants each have a role to play in mitigating the immediate short term economic pain as much as possible to ensure that New Zealand businesses are adequately supported during the COVID-19 lockdown period to survive. But also so that commercial, office and industrial property owners – who are the backbone and driver of critical infrastructure – can continue to invest in such projects by having a sustainable revenue stream. This will be key to contributing to New Zealand’s economic recovery and a vibrant construction sector in coming years.
We believe there is no silver bullet that will address all concerns, and have outlined a support package for commercial tenants comprising multiple components for consideration by Government.
The Government haven’t given us any firm timeframes for response yet, but Grant Robinson did say yesterday on both TV1 and on Stuff that work is underway and the Government will have more to say in the coming days – which gives us some hope that they have understood the urgency of the situation.
We will keep all members updated as soon as we have any indication of what the Government’s intentions are.
We are your direct line to government
- Last week, Property Council successfully raised the issue of rent relief with the Government, putting this critical topic on the government agenda.
- Over the weekend, a dedicated member working group met to discuss potential solutions to the problem and options for support of the industry. This afternoon, this paper was presented to government. Special thanks go to those members who dedicated their weekend to contributing to this document.
- Our primary focus is on ensuring the Government understands the necessity of the property sector to the health of the wider economy. On this basis, we continue to engage with the Construction Sector Accord and have contributed to a paper proposing solutions for the construction sector.
While it is too early to say what tact the Government will take in response to our proposals, we are heartened by their determination to keep government projects alive and to understand the complexities of keeping the system going in order to build our way out of recession. We want to ensure that tenants can stay in business to minimise loss of employment wherever possible.
With reports of contractors feeling the pinch, it would be hugely disappointing to see all the work done to grow the construction sector undone in a matter of weeks.
The Construction Sector Accord remains a vital link to government officials and we are pleased with the direct access we have had with Ministers so far. There is a real sense of urgency and collaboration, both of which will be needed as we work through these challenges together.
We continue to hear of many tenants who have issued notice that they will not be paying rent during the lockdown. It is particularly disappointing to hear of some established industry leaders taking this position and we call on landlords and tenants to negotiate in good faith. On the flip side, we have seen communications from a number of property owners extending their support to tenants through partial rent rebates, business continuity support and a collaborative and coordinated approach. We commend those who are reacting with empathy and humanity at this time and believe that this approach will ultimately deliver a better outcome for tenants and property owners alike.
At times like these, getting accurate information and support can prove daunting. It is with this in mind that we have launched a Property Council Members Group on LinkedIn to connect members with the help they need. If you have a question you would like answered or a service you need support in, please post it in the group for moderation and publication.
This is a time for collaboration and unity - the expertise of our membership is unrivaled and we encourage you to contribute to the discussion in a constructive and helpful manner.
Tell us what you need
The Member and Commercial Services team are currently reviewing our final software options for webinars and we hope to have these up and running in a matter of weeks. In the meantime, we invite you to let us know what you'd like to hear about. We recognise that there's a lot of content out there at the moment and want to know:
- What information or advice do you need that you're not getting elsewhere?
- How can we support you and your business at this time?
- What are the topics of vital importance to inform the business decisions that need to be made in the coming weeks and months?
Those who are the designated business administrator for their member company will soon be receiving an invoice for renewal of your Property Council membership for the 2020/2021 year. We appreciate that this is a difficult time for businesses and expect many members will be evaluating every invoice that crosses their desk. These are the times that membership associations are made for.
Without your support we would not have a seat at the table with Ministers and officials, nor would we have a mandate to speak on behalf of the industry. We call on members to continue to support us at this time and trust that we are doing everything possible to minimise costs whist maintaining services and increasing our advocacy.
We invite you to drop us a line at email@example.com if you have any questions or queries.
Stay home, stay safe and keep in touch.
Where does your council stand on a rates freeze?
Councils across the country are scheduled to increase rates by as much as 10% in the coming months, despite the hardships faced by households and businesses in the wake of the COVID-19 lockdown. Property Council wrote to all council's last week calling for reconsideration of increases and requesting that any increase be kept to an inflationary level. Some councils have already responded, with the Bay of Plenty and Hawkes' Bay Regional Council's both making announcements.
The Taypayers' Union have published a live dashboard for the public to find out where their local and regional council stands on rates freezes.
Rent payments during lockdown
Jane Holland of Bell Gully gives an overview of the potential impact for landlords and tenants over the lockdown period.
Commercial real estate values, as a crisis unfolds
PwC have today released a discussion paper on property valuation fundamentals in the context of COVID-19 and kindly made this available to our members.
The paper discusses the two key drivers of commercial rela estate that are under pressure; net operating cashflows and investment sentiment / market liquidity.
Infrastructure Industry Reference Group
Ministers Jones and Twyford have created the Infrastructure Industry Reference Group to advise the Government on issues arising for the construction industry in NZ as a result of COVID-19.
The group has been asked to prepare a list of truly “shovel ready” infrastructure projects that could be awarded immediately on remobilisation of the industry. In addition, we have been asked to identify what changes would be required, under urgency, to existing laws and processes to overcome any remaining obstacles to project start dates.
We are inviting industry participants, consultants, local bodies and other assets owners who have projects that fit the following criteria to provide us with a list for consideration.
Projects would need to meet the following general criteria:
- be truly ready for construction. We will only consider projects that are ready now or within a realistic 6 months. We will use our engineering adviser to form a very quick view on this and we will not progress anything at this point that falls outside this criteria
- be of an infrastructure nature. This does not necessarily mean just horizontal projects ( roads, bridges, water ) and would include schools, hospitals etc. It could also include private sector projects that could be repurposed for the public benefit -however please note we would not consider anything that was just for the benefit of private sector owners.
- is itself ( or as a package of similar projects ) of a significant size, so that employment benefits for workers ( either directly or as part of the NZ based supply chain ) is material. We will consider smaller projects in regions where projects are usually smaller, as we seek to get reasonable regional representation. However, given resource constraints it is unlikely that we would consider anything less than $10m even in the smallest region.
- the project brings real value ( in an economic or social sense ) to NZ as a whole or the region in which it is located. The idea of building bridges to nowhere is not appealing.
If your organisation has projects, or been involved with such, that it believes fits these criteria please forward the list to firstname.lastname@example.org as soon as possible.
Crown Infrastructure Partners will be providing the support to administer this process but any final decisions on implementation will be made by the Government.
Any questions can be sent to the above email. The group will also provide clarification on the project information required either through email or by posting this information on our website www.crowninfrastructure.govt.nz
- 27 March: What does the lockdown mean for tenants and property owners? (member alert)
- 27 March: Commercial landlords call for support to keep the economy moving (media release)
- 25 March: Council fiscal responsibility needs to be balanced by prudent spending (media release)
- 24 March: Shopping centre industry prepares for Alert Level 4 (media release)
- 24 March: What does an Alert Level 3 and 4 mean for property? (member alert)
- 18 March: COVID-19 economic support package welcomed by the property sector (media release)
- 18 March: COVID-19 economic support package: what's in it for the property sector? (news story)
- 17 March: Property Council's response to COVID-19 (member alert)
Do you have a property-related COVID-19 question you want answered? Drop us a line at email@example.com and we will do our best to answer it.