Greens pledge two-way rent reviews and auction power for empty shops
The Green Party would allow market rent reviews to cut small-business rents as well as increase them, co-leader Chlöe Swarbrick said in proposals reported on 19 September.
The policy targets so-called ratchet clauses, which prevent commercial rent falling below the rent already paid when a review takes place. Swarbrick said the Greens would change the law for businesses with turnover under $30 million, according to RNZ. That would cover new and existing leases.
Under the proposal, any limit on how far rent could fall would match the limit on how far it could rise. The Greens illustrated it in simple terms. A 5 percent cap on reductions would mean a 5 percent cap on increases.
The Greens also pledged to let councils auction leases for long-term empty shops in central business districts. Where a space had been empty for more than 12 months, the council could give the landlord eight weeks to find a tenant. If none was found, the council could put the lease to auction, according to RNZ.
Looking at what this means for those who draft and advise on leases, the detail around caps will do a lot of work. Symmetry sounds straightforward. In practice, advisers will want to know how a cap is set, who sets it, and whether parties can contract out of it or negotiate a different band. Retrospective application to existing leases also raises a different set of questions from application to new leases alone. It touches on certainty of contract.
The broader context here is the role envisaged for councils. An auction power for shops empty for more than a year puts councils in the middle of private leasing decisions. For council lawyers and planners, the eight-week notice period is only the starting point. They will need to work through how a lease is defined for auction, how market rent is established at that point, and how landlord obligations are managed once a tenant is installed through that process. For MPs, the threshold question is legislative design. A turnover test of $30 million captures a wide range of tenants but requires a clear method for measurement and dispute resolution.
In my view, the politics are as instructive as the mechanics. The proposal speaks to two audiences at once. One is small tenants seeking leverage at review. The other is councils and central-city advocates concerned about vacancies. Whether those two strands can be carried in one legislative package, and how commercial landlords respond to both the loss of ratchet protection and the prospect of forced auctions, will shape how this pledge is debated in the House and beyond it.
