Greens propose end to ratchet clauses and auctions for empty shops
The Green Party would allow market rent reviews to cut small-business rents as well as lift them, co-leader Chlöe Swarbrick said in proposals reported on 19 September.
The plan targets ratchet clauses. That is the lease term that stops shop rent falling below what a tenant already pays at a review, even if market rents have dropped. Swarbrick said the Greens would change the law for businesses with turnover under $30 million, according to RNZ. It would apply to new and existing leases.
Under the proposal, any limit on a rent cut would match the limit on a rent rise. The Greens gave a simple example. A 5 percent cap on cuts would mean a 5 percent cap on rises.
The Greens also pledged to let councils auction leases for shops left empty long-term in central business districts. If a space had been empty for more than 12 months, the council could give the landlord eight weeks to find a tenant. If no tenant was found, the council could put the lease to auction, according to RNZ.
Looking at what this means for lawyers and others who write leases, the detail on caps will matter. Symmetry sounds simple, like matching limits on both sides. In practice, advisers will ask how a cap is set, who sets it, and whether parties can opt out or agree a different range. Applying the change to existing leases raises different questions from applying it to new leases only. It touches on certainty of contract.
The broader context here is the role planned for councils. An auction power for shops empty for more than a year puts councils between landlords and tenants in private deals. For council lawyers and planners, the eight-week notice period is only the start. They will need to work through how a lease is defined for auction, how market rent is set at that point, and how landlord duties are handled once a tenant moves in through that process. For MPs, the first question is how the law is written. A $30 million turnover test covers many tenants but needs a clear way to measure turnover and settle disputes.
In my view, the politics are as telling as the mechanics. The proposal speaks to two groups at once. One is small tenants wanting more leverage at review. The other is councils and central-city supporters worried about empty shops. Whether those two parts can be carried in one law change, and how commercial landlords react to losing ratchet protection and facing forced auctions, will shape how this pledge is debated in the House and beyond it.
