Landlords, not taxpayers, to help cover businesses' rent costs

Property

Government looking to help commercial landlords and tenants negotiate rent concessions, but won't subsidise rent costs nor impose blanket rent hike freezes

29th Apr 20, 3:50pm by Jenée Tibshraeny

The Government is looking at how it can help guide commercial landlords and COVID-19-affected tenants negotiate rent concessions.

It will not however impose rent hike freezes as it has done in the residential property market. Nor will it subsidise rent payments.

Justice Minister Andrew Little said the Cabinet Economic Development Committee is looking at “how parties to a commercial lease would be expected to consider rent concessions in whole or in part for a period where the response to COVID-19 has had a material impact on a business”.

“The lockdown has affected businesses in different ways and it wouldn't be fair to have one solution - like a rent freeze - for every situation, especially when in many situations landlords have already agreed to rent reductions,” Little said.

"We had heard the call to subsidise rent or to freeze rents. However both of these approaches would have meant commercial property owners would have had their income protected at a time when no one else enjoys that privilege…

“Landlords need to share the burden of COVID-19 fairly with their tenants.”

Prime Minister Jacinda Ardern said work underway in New Zealand is similar to that in Australia, where under a new mandatory code of conduct, commercial landlords have to negotiate with tenants that are eligible for Australia’s JobKeeper programme and have turnovers of less than A$50 million.

They are required to reduce rent proportional to the trading loss in the tenant’s business. The reduction must be in the form of a rent waiver for at least half of the required amount.

Little acknowledged the New Zealand Government’s move to push out deadlines on commercial lease terminations is “not enough in many cases”.

Under rules announced on April 15, a commercial landlord can only cancel a tenancy if their tenant’s rent is 30 working days in arrears, as opposed to 10 working days, as was previously the case.

Banks and other lenders that provide both commercial mortgages and home loans also have to hold fire for longer before exercising their powers to repossess or sell a property they’ve lent against. This timeframe was extended from 20 to 40 working days for mortgaged land, and from 10 to 20 working days for mortgaged goods.

Little didn’t put a timeframe on when a code of conduct or something similar would be unveiled. Ardern said a decision will be made "shortly".

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89 Comments

by cmat | 29th Apr 20, 4:29pm 1588134554

This is the correct answer:
“Landlords need to share the burden of COVID-19 fairly with their tenants.”

Don't underwrite landlords by subsidising rent.

by Yvil | 29th Apr 20, 5:56pm 1588139807

"fairly" you should be in government with Labour "fairly" LOL what a funny joke, I suppose you have absolutely no experience at all doing business. Who do you suggest decides what is fair and what isn't ??? Oh in our fantasy world of unicorns the landlord and the tenants will agree perfectly what is fair, lol

by cmat | 29th Apr 20, 6:01pm 1588140115

Erm... you mean like, you know, arm's length negotiation between two independent parties in which both parties are acting in their own self-interest. Both buyer and seller are independent, possess equal bargaining power, are not under pressure or duress from the other party.

It is a novel idea right.

by Independent_Observer | 29th Apr 20, 6:35pm 1588142101

I think his understanding of fair is a landlord bullying a tenant. Now it becomes clear the tenants have more power than the landlord - that of selectivity.

by Yvil | 29th Apr 20, 6:36pm 1588142209

Another comment based on absolutely zero experience

by Pragmatist | 29th Apr 20, 7:02pm 1588143735

Translation: Another comment that doesn't fit Yvil's heavily blinkered world view.

by CJ099 | 29th Apr 20, 8:34pm 1588149297

Yep I guess he's still processing how stuffed the holiday property let industry is due to lack of tourism, followed by the avalanche of Airbnb's hitting both the rental and sale property markets. Not a good time to be a motel owner.

by Yvil | 29th Apr 20, 6:35pm 1588142119

Yes arm's length negotiation is great, that's how things have been until now and if not resolved it goes to court. But now the government wants to "help", with no power to enforce anything more than previously. I suppose J Ardern will show up at each disagreement with her great smile and say "pleeeeease"

by CJ099 | 29th Apr 20, 8:35pm 1588149336

Nahh just the Tax Man.

by Houseworks | 30th Apr 20, 6:50am 1588186208

The mesmerizing and hypnotic smile. Children fall for her everywhere

by RickStrauss | 30th Apr 20, 10:23am 1588199018

Bring back John Key, the salt of the earth Kiwi bloke's version of "mesmerizing and hypnotic smile", a great guy to have a beer with.

by Mr Ed | 30th Apr 20, 12:43pm 1588207420

parties bound to a lease are not independent and do not possess equal bargaining power

by Sluggy | 29th Apr 20, 10:24pm 1588155853

i negotiated a 50% decrease for the lockdown period with my commercial landlord. It wasnt difficult.

by Speechless | 29th Apr 20, 11:47pm 1588160857

What exactly does your business experience consist of Yvil? Ever bootstrapped a startup? Ever launched a product? Ever done anything besides rent rooms to people who didn't have much choice in the matter?

by RickStrauss | 30th Apr 20, 10:22am 1588198944

Landlords are already being supported through wage subsidies and accommodation supplements though, and have been for years. The rising tides that lift all boats. Where does it stop with subsidising property investment, and why should it take precedence over other Kiwis?

by raumati | 1st May 20, 1:01pm 1588294892

Of course banks don't have to share the burden of Covid 19 with their borrower's.

by The_4th_estate | 29th Apr 20, 5:23pm 1588137834

For a few seconds I thought we were going to see the commercial sectors version of the accomodation supplement! What next...Working For Employers Tax Credits? Having said that, You have to admit that currently if its residential or commercial tenancies, the power imbalance is enormously in the favor of the landlord in both scenarios. Just another example of succesive governments that have not done policy development work to keep regulation framework fit for purpose. Good to see some positive changes in the wind... its not very nice when your store gets locked shut by Mall management when the relationship goes sour....

by BigDaddy | 29th Apr 20, 4:52pm 1588135948

The landlord is no way more powerful than the tenant. This is nonsense beloved by the Left Wing who have a deep hatred for the rentier class.
Tell that to landlords who have mortgages to pay plus operating expenses just like home owners.
Tenants should be given financial support to 80% of their usual rent just as with wage subsidies for a short while, maybe 6 months max.
The alternative is streets and suburbs full of empty shops and offices with decay and accumulations of rubbish because there is no body is there to care.
Is that what you want ?
And what do you think will happen to the bankrupt tenants, their employers and the landlords?
They will go on the dole, probably for life, which will cost more than any short term subsidy.

by cmat | 29th Apr 20, 4:56pm 1588136187

"Tenants should be given financial support to 80% of their usual rent"

Absolutely no way and it's total rubbish to suggest that if we don't underwrite 80%(! Get out.) of commercial landlord / REIT income then we will have shops full of empty shops.

As a landlord you're going to drive your tenant to the wall?
Then what? You think you're going to magically be able to tenant that again in the worst economic crisis we've seen in our lifetimes?
You're dreaming.

Go have a chat with your bank if you've got issues and if it's still too hot in the kitchen then there is a really simple solution - Sell. Your. Asset.
No one is underwriting equity investors or bond holders in any other asset class.
Stop the crocodile tears to Government demanding a bail-out.

by BigDaddy | 29th Apr 20, 5:11pm 1588137105

Landlords and tenants are all part of the same financial chain.
If one link breaks then the whole lot goes down with the domino effect.
Strange how some see no problem in supporting workers but supporting their employers is an anathema to them.
What’s the point of supporting the workers if they have nowhere to work?
What’s the point of paying subsidies to the deserving poor if all they can do is sit around living on the breadline.
We either support everyone or no one.

by Foreign buyer | 29th Apr 20, 5:17pm 1588137434

We keep on hearing about how directors and specuvestors deserve the big bucks because they take all the risks. So now is the bad part of the risk cycle. Simple.

by cmat | 29th Apr 20, 5:38pm 1588138700

That's *aaaaaaabsolute* complete rubbish.
As an equity holder in an asset I can sell that asset to someone else and the asset remains.
Same goes for real property. More so.

If the landlord goes bust then guess what?
The premises is still there.
The Bank takes possession and comes to an amicable position with the tenant to work through the crisis.
The business can continue on potentially.

And I'm a centre-right libertarian so stop with this "Left Wing" rubbish.
You're the one demanding Government ride to your rescue - trying to somehow justify that it's OK to socialise your loses. Please.

Moral hazard - Go look it up.
You took on a risk entering into your 'investment'.
The Bank's job is to mitigate its credit risk with you.

Taxpayers are not here to "support" your investment any more than they are here to "support" those who have loses in shares or bonds - who do I cry about being made whole on those investments??
Who do I cry to about all the companies that aren't paying me the dividends I'm 'entitled' to??
I mean, "we either support everyone or no one" - am I right?

by Independent_Observer | 29th Apr 20, 5:31pm 1588138267

Is BigDaddy Ollie Newland?

https://www.stuff.co.nz/business/108314966/property-guru-olly-newland-s…

by nymad | 29th Apr 20, 5:45pm 1588139159

This line is great.
There were risks but "you can mitigate these risks if you know how".

Seems that mitigation strategy involves offloading the risk to the taxpayer.

by cmat | 29th Apr 20, 6:32pm 1588141954

LOL. That's amazing.

Imagine buying commercial property at record low yields.
Yield which, you know, is compensation for *risk* and then having to deal with risk?
From your own pocket?
No way.

Socialising Losses 101 for fee paying 'novices' at Ollie's 'Mini University'

by CN | 29th Apr 20, 9:44pm 1588153472

Those using the right framework could see that assets were priced for return free risk. The risk to reward was so unattractive.

In "zig zag" theory, espoused by Sit23, many commenters on interest.co.nz could see that the risk of a zig was high.

Meanwhile others were using "rear view mirror" theory and extrapolating historical returns into the future ..

by CN | 29th Apr 20, 9:03pm 1588150999

This is also a great line.

" .... You have to have big goolies to be in this game."

by CN | 29th Apr 20, 9:14pm 1588151652

The same commercial property purchase could be financed by property investors in two different ways with very different financial outcomes

1) 100% equity - conservatively financed
2) 35% equity, 65% debt - aggressively financed

The conservatively financed investor with a cash emergency fund, can sleep well at night with less financial pressure than the investor who chose to finance their investment more aggressively.

So if an investor has chosen to aggressively finance the purchase of their commercial property investment (some may have even borrowed against their home for their equity investment in commercial property, meaning the commercial property was 100% financed by debt), loses their main source of income and then does not have an emergency fund, they have put themselves in a potentially financially vulnerable position. By taking on high levels of debt, the aggressive investor has much less financial flexibilty than compared to the conservatively financed investor.

People and businesses should always manage their finances so that they're able to handle any unexpected emergency. This is regardless of the source of their income:
1) employment
2) income from investments such as rental property (residential, commercial, etc)
3) income from investments such as dividends from listed shares,, interest income from time deposits, etc

That means maintaining a cash emergency fund of sufficient size to cover living costs for a period. Some people are now learning firsthand the pain of not having an adequate cash emergency fund.

As Warren Buffett says, when the tide goes out, you find out who has been swimming naked.

by Chris-M | 29th Apr 20, 5:49pm 1588139393

The building will still be there. The owner may change. But the market will ensure that who ever owns the building, they will be very willing to rent it.
If there is anything that will ensure empty abandoned buildings it will be overly high rents driving tenants out of business or out of the bricks and mortar business model.

by Yvil | 29th Apr 20, 6:47pm 1588142822

Very well said big daddy, people must be really basic to not understand your simple point

by cmat | 29th Apr 20, 7:04pm 1588143864

Congrats Yvil, you graduate with full marks in Ollie 305 - Rationalising Being Bailed Out with Public Money

by Yvil | 29th Apr 20, 7:38pm 1588145893

Thanks, glad to see you admit that Ollie knows a lot more about commercial property than you do

by Speechless | 29th Apr 20, 11:59pm 1588161597

"What’s the point of supporting the workers if they have nowhere to work?"

Oh but they do have somewhere to work Olly. The building isn't going away. You and your equity are what's going away.

by RickStrauss | 30th Apr 20, 10:28am 1588199295

On that basis, sounds like a blanket UBI would be better. No justification for providing massive support to the wealthy and minimal support to the poor because it's proportional to what they already had. Keeping the economy going should not be about trying to preserve your position in society and protect you from investment risk that insurance and cash buffers exist to mitigate.

At least we're certainly seeing the curtain pulled back and the line between "own two feet" investors and welfare beneficiaries being revealed to be pretty much nonexistent. Time to stop beneficiary bashing, I guess.

by Independent_Observer | 29th Apr 20, 5:11pm 1588137116

If it wasn't COVID-19 it was going to be something else that got us to this point - but instead of being a slow painful process its been like being hit by an earthquake and exposed all the weakness in the system inside 5 weeks (as opposed to a few years).

When rates are zero and there's no further ability to stimulate the economy, this situation we find ourselves in was going to happen one way or the other. End of the long term debt cycle. No further debt can solve our debt problem....so now what? Deleveraging...question then becomes, how well will it be managed without causing run away deflation or inflation.

by cmat | 29th Apr 20, 5:30pm 1588138237

Exactly! I'm a free market guy.
But people will moan, "Oh, but this was the Government shutting us down".

Please. It's a pandemic.
It's a natural disaster, this is a reasonable response to this particular disaster.
In an Earthquake, Eruption, or Cyclone you'd be shut down for an extended period too.
In any normal recession you'd experience disruption.

Calling for a rent subsidy is a shameless attempt by asset owners to get bailed-out.

by Independent_Observer | 29th Apr 20, 5:35pm 1588138529

Yes there is a warped sense of entitlement by some asset owning 'investors' who are happy making big money when its going good - then whinging when they might take a loss.

I own AirNZ shares. I'm not asking the government to pay me for that loss. It was a risk I took when purchasing those shares. It could have been a plane crash or mismanagement of the company. But no, it was COVID 19.

Our markets are going to be terribly distorted if not careful and could result in some form a revolution if rewards and losses aren't evenly distributed.

by Independent_Observer | 29th Apr 20, 5:18pm 1588137499

I think a generation of investors are just realising that everything they thought they knew wasn't true.

by Wiseguy | 29th Apr 20, 5:41pm 1588138884

Shows how unpredictable the world can be, anything can happen at anytime

by Speechless | 29th Apr 20, 11:54pm 1588161294

A massive debt bubble popping is the opposite of unpredictable.

by wirehunt | 29th Apr 20, 9:26pm 1588152366

What a joke. We've been subsidizing residential landlords to the tune of 5 billion a year for how many years now?

END ALL RENTAL SUBSIDIES!

If it's good enough for one then...

by BigDaddy | 1st May 20, 12:23pm 1588292593

I am sufficiently proud of my knowing my subject to be modest enough to realise that I don’t know everything.

by Pragmatist | 29th Apr 20, 5:04pm 1588136653

bankrupt tenants will struggle to get credit for a while.. as will anyone with uncertain or unstable income. Its part of the cycle. As is asset values returning to something based on fundamentals. Suck it up.

by hemihua | 29th Apr 20, 7:06pm 1588143968

You're not entirely wrong, for some landlords (hopefully most) they have these negotiations with tenants and come to an agreement. Part of me says 'let them at it' - then if the tenant can't afford to pay and is evicted the landlord takes the gamble of whether they can find another tenant willing to pay the same amount (we probably all know the answer to this already). Why should the government underwrite the gamble (on either side)?

by Speechless | 29th Apr 20, 11:37pm 1588160254

Yeah sorry Olly, you ain't Goldman Sachs.

by Speechless | 30th Apr 20, 12:48am 1588164489

Ahh, this is awkward. You think you just have a cashflow problem, when it fact your business model has just been destroyed at a fundamental level. Much of that retail demand for commercial property is NEVER coming back - I don't mean 'not until after the recession,' I mean 'not ever.' Not just because of the virus but because of Jeff Bezos. The retailers that survive will be the ones that move wholly or partly online the most efficiently. That's why, even if there was any justification for giving you a public bailout for cashflow support (which there isn't), you still wouldn't get it, because it would be money into a black hole.

by Houseworks | 29th Apr 20, 8:50pm 1588150223

Why arent retailers open for busyness. Theres the missing link and it goes straight back to inept government.
Edit: let's start this convo again... and thanks David Chaston / Jenèe for the update.

by Pragmatist | 29th Apr 20, 9:24pm 1588152295

Wow, That got pruned silently by the editor? *smh*

by Houseworks | 29th Apr 20, 10:07pm 1588154864

Sydney Morning Herald ?

by Pragmatist | 29th Apr 20, 11:09pm 1588158552

by Houseworks | 30th Apr 20, 5:22am 1588180948

Yes I agree.

by sharetrader | 29th Apr 20, 6:22pm 1588141337

Good let the market decide the rates and prices of assets, i think the accommodation supplement is a terrible subsidy that distorts rents and property pricing and should be done away with, take that two billion a year and use it to build houses instead.
and same for WFF another terrible subsidy, it is not an efficient way to distribute funds a simpler way is via tax rates make the first 20k tax free.
same as people collecting benefits living in HNZ homes , they get paid by one department then have to pay another, it should be deducted before payment ie pay those furnished with a home less
i remember when the dole was tax free then they brought in tax on it and the reason why so that those getting it could feel like they were contributing to NZ WTF.
as an aside i am getting hit up to put more capital into my commercial properties to see us through and im fine with that, they are a good long term investment and have done well over the last ten years and in a couple will come good again

by Independent_Observer | 29th Apr 20, 6:31pm 1588141872

All of those things have been put in place to avoid short term pain (which we're now going to face regardless). Deadweight loss? Possibly.

by Houseworks | 30th Apr 20, 5:24am 1588181088

AS helps homeowners with their mortgages too. Some have been laid off completely out of the blue and through no fault of their own. I totally disagree that it should only be a few ... those lucky enough to be endowed with a state house who should get housing assistance.

by Sluggy | 30th Apr 20, 9:16am 1588194989

Prop up the ponzi at any cost.... Nah the sooner we just take the enevitable bubble pop, the better. Let er rip tatter chip.

by Yvil | 29th Apr 20, 6:31pm 1588141871

So the government is going to "help landlords and tenants negotiate" without any powers to enforce anything. What a ridiculous statement, are they 9 years old ? It really sounds like they have zero business understanding.

by Independent_Observer | 29th Apr 20, 6:32pm 1588141938

Guess we just leave the business world to deal with things themselves eh Yvil given they're so grown up and can deal with things like adults?

No government help/intervention at all then - how does that sound to you?

by Yvil | 29th Apr 20, 6:42pm 1588142525

Ok, I understand you are really young and inexperienced. There is a process in place in the ADSL wich sets out precisely how rental disagreements are dealt with, if agreement cannot be reached there are further clauses that set out the mechanism for mediation, appointing a neutral mediator and if this fails it goes to court for arbitration.
Having the government "help" with no legal power to do so is a joke written by children

by BigDaddy | 29th Apr 20, 6:48pm 1588142936

Ha ha! I know these clauses in ADLS leases off by heart.
Following that system you suggest takes months and up to a year to run their courses.
It was designed where tenant and landlord are on an equal footing,
They are useless for emergencies such as we have at present.

by Yvil | 29th Apr 20, 6:54pm 1588143256

Agreed BD, so do you think the government's help is enforceable in any way at all?

by BigDaddy | 29th Apr 20, 7:29pm 1588145343

Nope.

by Yvil | 29th Apr 20, 7:48pm 1588146485

That's my point

by Pragmatist | 29th Apr 20, 6:50pm 1588143034

The govt doesn't necessarily need to make legal moves to help.. it could simply do something like make mediators available at govt expense to help resolve these disagreements. Or would free mediation not be helpful in your world? you'd rather get a bill for it?

by The_4th_estate | 29th Apr 20, 6:46pm 1588142772

the ugly truth is that business in this country can't wipe its own ass...remember NZ Inc is the same entity that ended up being sued by the Saudi government over the sheep milking deal that went sour...and I think we even bribed them to get the deal? What a calamity! I wonder if Maurice Mc Cully got invited to the Saudi Embassy for...'a meeting to check his passport credentials?' CHOP CHOP!

by Wrong John | 29th Apr 20, 8:04pm 1588147466

A great read tonight. Congrats all. I'm still learning but am sure glad we don't have any debt just now. Have had to adjust the balance sheet & it didn't make me smile. Just as well we've been here before. And although every slump is different, believe me, they still hurt the same.

by CJ099 | 29th Apr 20, 8:40pm 1588149628

Yep same here so glad I sold off my rental property a few years ago and used it to pay off our mortgage. :)

by waymad | 29th Apr 20, 8:49pm 1588150142

Indeed, LJM. No debt helps a lot. What's crystal clear from this rather sorry thread (threadbare?) is that many commenters have little clue about the long chains of business which normally function bottom-up: premises has tenants, pays rates, power, utilities, has cleaners, pays a mortgage, needs occasional R&M is not covered in the lease, so employs tradies etc. Same for each tenant: suppliers, tradies, staff, customers. Take the next layer down - tradies and cleaners have mortgages, staff, vehicles, and so on.

Then kerblooey. A top-down pause. It's not just the tenants and the landlords, It's the tradies, the cleaners, their staff. Second and third order effects.

I'm not suggesting any solution. But what is obvious is that Der Gubmint has zero clue about these long dependency chains, and about the effects coming down the pike as the chains fall apart. I've characterised this whole thing as a Reverse BOM - A dis-assembling economy crucially has no BOM's which specify the componentry which will ultimately be affected....

by Petey | 29th Apr 20, 9:22pm 1588152138

With the feeling by many that the market should be allowed to sort out the tenant landlord rent setting issue or the landlord should just suck it up that to me is fine . But I want the same rule to apply to banks when people default on their mortgages also to farming when under pressure not to forget accomodation supplements to subsidize expensive domestic rents . While we are at it it would be nice to see capitalism allowed to work on wall st as well as our own financial markets and institutions. Governments are often in the habit of picking winners and by default losers often via cronyism or under pressure from other players ie banks .

by wirehunt | 29th Apr 20, 9:32pm 1588152777

We don't have capitalism.

by THE MAN 2 | 29th Apr 20, 9:33pm 1588152798

What a silly thing to say!
No debt helps!
The truth is that debt is what makes people financially successful compared to those that don’t borrow and end up working for wages all their lives and then retire with next to nothing.
I can assure you that people that borrow money and buy assets will always be further ahead than those that don’t!
With interest rates where they have been over the last few years, people who have borrowed heavily and are getting good returns will be doing a heck of a lot better than those that have been working for wages or salaries, may now not have work to go to when we are out of lockdown fully.
Some Commercial property will get a bit of a hiding, however industrial property with manufacturing and export will be just fine.

by Independent_Observer | 29th Apr 20, 10:16pm 1588155362

You’ve summed up exactly why we’re up the creek without a paddle thanks TM2.

No requirement to be productive, just used debt as a leveraged gamble on asset prices.

by RickStrauss | 30th Apr 20, 10:31am 1588199488

He does make it sound like investors have been making a lot of money so don't need protecting through socialism.

by Sluggy | 29th Apr 20, 10:31pm 1588156277

Some Commercial property will get a bit of a hiding, however industrial property with manufacturing and export will be just fine.

The Oracle has spoken. Sssshhhhhh.

by gordon | 29th Apr 20, 11:05pm 1588158342

Remember everyone we are being preached to by an RE agent. Typically very little education and failed at something so resorted to flogging property.

by THE MAN 2 | 29th Apr 20, 11:58pm 1588161511

Gordon, an ex agent several years ago.
You have to keep working and making sales to live, whereas Investing gives you far more freedom and choice!
What I will say is that anyone can be a property investor, but some invest better than others.
Wouldn’t say I had little education, but yes I have learnt more by teaching myself!

by gordon | 30th Apr 20, 1:16pm 1588209408

Teaching yourself can be dangerous The Boy and the comments you come out with on a regular basis are proof in the pudding. One of the classics was the one about our PM being pregnant during the last election and you were indignant that she failed to disclose it to us during the election. This particular comment showed us all not only how old you are but also how out of touch you are and that you are indeed a misogynist.

by Speechless | 29th Apr 20, 11:40pm 1588160412

Utterly clueless.

by Averageman | 30th Apr 20, 8:08am 1588190915

Agree it's a new reality. Drive your tenant to the wall, and then what. It's been one way traffic for quite a while, but in a flash everything has changed.

Stable tenant with sufficient income to pay stupid rent levels just became plated in gold for their ability to support bank profit. Well, know that banks value you more as an owner occupier than buffering through a speculator. Work from home trial has shown many dont need a landlord for those that can. Very interesting times coming.

Time to save a bit and purchase in the wreckage in the next 6-18 months. Your bank will support you.

by Good Samaritian | 29th Apr 20, 10:47pm 1588157279

Have you noticed every business other than banks, insurance companies and supermarket have not be offered discounts or reduce charges.

Banks have been disingenuous offering mortgage holidays, when they know damn well this is just deferred extra investment for them.

Consider this. The banks collectively lend some $400 billion at probably an average lending rate of 4% or more; equivalent to $16 billion in annual interest payments. Just how they get $5 billion profit from this defies belief. So if they reduce their lending margin by 1% (we'll call it a subsidy for the benefit of the community they operate in) they'd still make a profit.

Remind me of who's making a profit in these times? Its time these banksters and their shareholders shared some pain. Its them that got us into this high debt position in the first place.

by Happydayz | 30th Apr 20, 7:19am 1588187948

I agree with this, bankers have negotiated themselves into a great position with the government, easy to when there is only four or five of you to get together and out the pressure on. Unfortunately for the thousands of NZ SME at the poignant time we did not have that unified voice to negotiate, now its a belated to little to late

by Happydayz | 30th Apr 20, 7:15am 1588187759

Our position on this is that things aren’t yet bad enough, once there is blood on the streets and world economy collapses then the government will help out tenants. Just like shutting the borders and going into lockdown the government didn’t take action untill it was really obvious it needed to happen, and that voters could see from the global situation it had to happen, and it was an easy sell, it is government by reading the voting public’s appetite. Not real ballsy leadership, let’s shut down the borders two weeks earlier type of stuff! So in our businesses we wait, if the collapse doesn’t happen then we will be fine, however my money is on the collapse, just a question of when

by murray86 | 30th Apr 20, 7:28am 1588188519

The Government is completely right in this. Landlords who think this is unfair should consider that they are in the first case a second tier business. In their business model they should have factored in the prospect of having periods without a tenant. This means they should be carrying sufficient reserves to maintain their business without income. The current situation is really no different. While they may have a tenant, that tenant cannot generate any income due to the Government mandated lockdown. To persist in demanding rent in such circumstances is unethical, and immoral. If landlords disagree with this, they should reconsider why they are in business, because they are taking on the cloak of a parasite.

Now if only the Government will have the same approach to residential landlords, they've been subsidised for years!

by John | 30th Apr 20, 8:22am 1588191754

Local government rates, building Wof cost s and insurance still need to be paid. Are they unethical and immoral?

by murray86 | 30th Apr 20, 9:45am 1588196750

I suggest that local government rates need to be looked at closely. i think councils need to retrench, cut functions to critical ones only and cut their rates demands. Let's face it, Councils have acted like spoiled, entitled children for generations. they need to be dialled back - hard! Any employee being paid over $100 K MUST take a pay cut of at least 20% (follow the Government). Councils need to understand that the source of their funds have virtually across the board been shoved into a no income situation and that they cannot demand payment from someone who is not receiving anything.

As to insurance and WoFs - same as no tenant. Suck it up!

by John | 30th Apr 20, 2:21pm 1588213290

But they do.

by CN | 1st May 20, 4:06am 1588262763

"In their business model they should have factored in the prospect of having periods without a tenant. This means they should be carrying sufficient reserves to maintain their business without income. The current situation is really no different. "

Exactly. If commercial landlords were caught out with insufficient cash reserves, then that is a business management issue.

Commercial property owners benefit from the rewards of their choices, as well as the risks of their choices.

If commercial landlords failed to plan for an interruption to their rental revenues, then they were unknowingly planning to fail.

If commercial landlords chose to maximise returns on equity via high debt, they made their business more vulnerable to an unexpected shock.

On the other hand, if commercial landlords chose to accept lower returns on equity via more equity and lower debt levels (or zero debt levels), they made their business less vulnerable to an unexpected shock.

Commercial property owners made their choices. Now they must reap the rewards and bear the consequences of their choice.

by kpnuts | 30th Apr 20, 12:36pm 1588206983

i only had two rentals -- but sold both of them one last Jan and one last May both in Hamilton- mainly as although i was fully compliant- well insulated maintained etc - the only predictable thing was this government hated property owners and intended to keep finding ways to put them out of business or take control over their properties from them -- BLOODY GLAD i did -- They gave beneficiaries ( people losing no income ) more money - propped up Air NZ but let then charge double to repatriate -- gave wage subsidies to MacDonald's, sky city, fletchers and top law and insurance firms, helped out students, banned evictions in fact helped everyone except landlords and commercial property owners who are expected to show goodwill and drop their prices at the drop of a hat -- as if they also dont have bills to pay, maintenance, insurance, mortgages rates and the like -- oh and may also be on reduced hours or lost their jobs -

by kpnuts | 30th Apr 20, 12:39pm 1588207152

And hey -- the law says the government cannot tell a private business what it can and cant charge -

So what -- lets change it this week so we can f$%k over property owners - all in favour hell yes says teh COL

most undemocratic government ever in NZ -

by Keen Observer | 30th Apr 20, 11:46pm 1588247188

After 10 years of stellar 'investment performances'.. majority of private & commercial Landlords are all still eager for govt. subsidy during this Covid-19 on going event, going back to dig from those profit seems out of question. Which beg pondering, why the bank savers of this nation.. also not asking the same subsidy? - This despite that the initial wages subsidy, as we're all predicted going straight to Landlords.. thus their Banks.
https://www.stuff.co.nz/life-style/homed/renting/121325211/tenants-goin…