The Government has announced that rent levels will be frozen for half a year, meaning no increases, due to the spread of the coronavirus in New Zealand.
What does that mean for those who are living in a rental property or running a business from a leased building?
The Real Estate Institute of New Zealand chief executive Bindi Norwell says Kiwis renting will benefit from the freeze.
“If tenants have lost their jobs and need support, they should talk to their landlord or property manager at their earliest convenience to work out a payment plan or to see what financial support is available to them,” she says.
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"This will allow tenants a degree of certainty in these uncertain times and allow them to plan for the future. The last thing we need over the coming weeks is people being made homeless as a result of Covid-19."
Goodwin Property Management boss Catherine Goodwin says that some tenants are still confused if they need to be paying rent.
The answer is yes - rent still needs to be paid during the lockdown period and during six-month freeze.
“There’s been a confusion and tenants are thinking the rent is free, which is completely wrong and it's created a chaos,” she says.
However, the wording of “frozen rent” can be easily be misunderstood, Goodwin argues.
“The increases rightfully should be stopped and the rent should not go up, but it should be paid.”
Some landlords, she says, are offering to lower the rent to ease the pressure off tenants.
“Whatever our landlords can do to support our tenants is appreciated, and it may include a reduction of rent until tenants get their subsidies," she says.
A landlord couple from Hamilton, who prefer not to be named, told OneRoof they are offering rent relief for their tenants.
“We can only do this as we have salaries for now and the flat mortgage is interest only,” the couple says.
Norwell says the new rules mean that tenants cannot be issued with a 90-day termination during the next six months.
Goodwin says if the rent isn’t paid, the agency won't be able to provide services to tenants and landlords. “Everyone needs to understand that the cycle is huge,” she says.
In case of an emergency, if electrical or plumbing issue occurs, the agency is aiming to immediately get it fixed without compromising anyone’s well-being.
“We need to have trades people with appropriate safe clothing with a protocol to safely go into the property, manage the emergency repair and maintenance, and leave.”
It could be trickier for commercial tenants, who may have a "no access in emergency" clause in their lease.
Colliers International’s strategic advisory director, Chris Farhi, recommends businesses need to check their lease carefully for the clause, which was introduced in 2012 in response to the Christchurch earthquakes.
“Whilst originally introduced in response to cordons from earthquakes, the clause covers a range of different emergency scenarios including eruptions, tsunamis, floods or even epidemics and contamination."
Daniel Kelleher, of law firm Buddle Findlay, says tenants providing non-essential services are now unable to access their premises to fully conduct their business operations. “A large number of commercial landlords use other forms of lease or completely bespoke leases, so again, you need to check your lease carefully,” says Kelleher.
Leases entered before 2012 might not have this clause and the effects of the clause will depend on the lease form, he says. “Clauses may have also been modified or deleted, or the lease might use a template which does not feature the clause.”
UPDATED: 5pm, Friday March 27
On Friday evening, the Ministry of Housing and Urban Development has updated their advice on tenants moving properties during COVID-19 lockdown.
“If parties must move in extreme circumstances, they must exercise extreme caution, follow Ministry of Health guidelines and follow the Alert System when moving,” says Tenancy Services Information and Education Manager Jennifer Sykes.
“If parties cannot work together to plan a move within the rules set by the Alert System, then the move must not take place.”
The Ministry clarified the changes to termination provisions in the new legislation passed earlier this week will be in place for three months, at which point the Government will consider whether they need to be extended. Tenants still need to pay rent during this time and could have their tenancy terminated by the Tenancy Tribunal if they get behind in their rent by 60 days or more and for other limited reasons during this period.
A set of questions and answers with more detailed scenarios is available on the Ministry of Housing and Urban Development website.
