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LETS GET DOWN TO BUSINESS.

Question :
Strategy for negotiating commercial rent relief

Question submitted 26/03/20 @ 11:48am
Industry: Food & Beverage
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  • Check the details in your contract. Most commercial lease agreements based on the standard Auckland District Law Society lease agreement, under section 27.5, contain a clause relating directly to No Access in Emergency. Have a look at this and then contact your landlord to nut out the details that are right for you.

    Even if your lease does not contain that clause you could approach your landlord and have a discussion about your positions. If you go into liquidation the landlord will take some time to replace your rental income. If your lease is terminated for non payment you may not be able to resume your business

    Landlords will have their own financial obligations and pressures. As far as I know there is no government relief for a landlord losing rental income except for help with their staff costs. For many that will not help at all or much.
    There may be more assistance for businesses than landlords. There is The Business Finance Guarantee Scheme which will help solvent businesses with turnover > $250k get credit relief. Details are yet to emerge and it is not clear if that will also be available for landlords. https://www.beehive.govt.nz/release/mortgage-holiday-and-business-finance-support-schemes-cushion-covid-impacts

    But this is only a loan which must be repaid eventually so it is a short term measure.
    It is also unlikely that business interruption insurance will cover this.

    It also appears to me that the mortgage relief package will apply only to residential properties and not commercial. If that is the case if might help small landlords and may ease cash flow pressure for business owners with mortgages over their homes to finance business.

    So it would appear there are no winners here, and starting a conversation early is the way to go

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