On 29 March 2020 the National Cabinet has released a Statement which sets out a common set of principles to govern intervention in the landlord tenant relationship and which is intended to assist a business to hibernate.
The aim is temporary rent relief for the tenant and in exchange it is hoped that the landlord will retain the tenant in the long term.
This is achieved by the following:
While the principles facilitating engagement between landlords and tenants are commercially sensible and consistent with the recommendations we have been giving our clients to date, the concept of termination for financial hardship raises complex issues. Not only is it inconsistent with the temporary ‘hibernation’ principles being put in place, but its application is uncertain without further guidance or legislation.
The government closure of businesses and the flow on effect will mean that many tenants will be looking to negotiate rent relief under leases.
If a landlord is prepared to offer a rent concession they should expect to receive assurances as to the continued performance of the lease from a tenant in exchange.
Whatever commercial terms may be agreed between landlords and tenants, any ‘temporary’ relief measures should: