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COVID-19 and commercial leases - Government Relief - Mortlock McCormack Law | Property and Commercial Law | Christchurch, New Zealand
COVID-19 and commercial leases - Government Relief - Mortlock McCormack Law | Property and Commercial Law | Christchurch, New Zealand
COVID-19 and commercial leases - Government Relief - Mortlock McCormack Law | Property and Commercial Law | Christchurch, New Zealand
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COVID-19 and commercial leases – Government Relief

September 2020

Chris Egden

COVID-19 has had a significant impact on commercial leases in New Zealand. Since the nationwide lockdown earlier this year, the Government has announced various forms of relief for both Landlord and Tenants. The focus of the initial changes was to allow more time for Tenants and Landlords to rectify defaults. For a Tenant this applies to late rent payments, and for a Landlord late mortgage payments. Many of our clients that are party to commercial leases will already be aware of the following temporary changes to notice periods under the Property Law Act 2007 (PLA):

  • The notice required to be given by a Landlord to cancel a commercial lease for overdue / non-payment of rent has been extended from 10 to 30 working days.
  • The notice period required for a lender to take possession of or sell a mortgaged property has been extended from 20 to 40 working days (note that this change applies to all mortgages, commercial or residential).

The notice periods will return to those prescribed by the PLA six months after the expiry of the Epidemic Preparedness (COVID-19) Notice, meaning at this stage they will apply until 24 March 2021.

In late August the Government announced a plan to put in place a subsidised arbitration and mediation service for commercial leases. Further information is still to come. However, what we know so far is that:

  • Use of the service will be voluntary.
  • To be eligible for the service, at least one party to the Lease must be a small to medium enterprise.
  • The service will be available from late September 2020 until the end of March 2021.
  • There will be no legislative change to the PLA.

If you have any questions concerning the above, or in relation to whether your own commercial lease contains any specific forms of relief within the lease itself, please don’t hesitate to contact Chris Egden, Associate (DDI 03 343 8584 / chris@mmlaw.co.nz) today.