What is it?

In the past few months, the world’s economy has been severely hurt by the outbreak of COVID-19. In many countries, businesses have been shut down by governments seeking to prevent the spread of this deadly disease. Sectors that have been particularly affected are tourism and hospitality but everyone feels the flow-on effects of forced isolation and reduced consumer confidence.

In an effort, to prop up the New Zealand economy the government has released the NZ Business Support Package. This is a $12.1bn relief package for New Zealanders.  It is one of the largest packages in the world per capita.

The $12.1 billion package includes:

• Initial $500 million boosts for health
• $5.1 billion in wage subsidies for affected businesses in all sectors and regions, available from today
• $126 million in COVID-19 leave and self-isolation support
• $2.8 billion income support package for our most vulnerable, including a permanent $25 per week benefit increase and a doubling of the Winter Energy Payment for 2020
• $100 million redeployment package
• $2.8 billion in business tax changes to free up cash flow, including a provisional tax threshold lift, the reinstatement of building depreciation and writing off interest on the late payment of tax
• $600 million initial aviation support package

You can read more detail on the government website: https://www.beehive.govt.nz/release/121-billion-support-new-zealanders-and-business

Who qualifies for this package?

If you’re an employer, contractor, sole trader, or self-employed, you may qualify for the COVID-19 wage subsidy.

• your business must be registered and operating in New Zealand
• your employees must be legally working in New Zealand
  the business must have experienced a minimum 30% decline in actual or predicted revenue over the period of a month when compared with the same month last year, and that decline is related to COVID-19
• your business must have taken active steps to mitigate the impact of COVID-19 (See how you can work towards this one below)
• you must make best efforts to retain employees and pay them a minimum of 80% of their normal income for the subsidised period.

For definitions of these qualifications, see the information under the Definitions for Wage Subsidy qualifications.

How much can you get?

The COVID-19 wage subsidy pays a flat rate of:

• $585.80 for people working 20 hours or more per week
• $350.00 for people working less than 20 hours per week

The subsidy is paid as a lump sum and covers 12 weeks per employee. It can be used for wages only. The aim is to help employers key their staff and ensure future viability of the business.

How do you apply?

You apply online for the wage subsidy or leave payment. You will need

• the IRD numbers of your business and the employees
• the business name and address and contact details
• the employee names and contact details

The Ministry of Social Development will be processing applications as quickly as possible. They are aiming to make payments 5 working days after the application is approved.

Over the past 3 weeks the government has been steadily increasing their measures to protect our nation against COVID-19. A brief timeline is outlined below.

28 Feb – first case in NZ
4 March to 15 March – cases increase to 8 people with one hospitalised
14 March – self imposed 14 day isolation for all people arriving in NZ
19 March – border closed to all foreign travellers
21 March – Alert system announced and NZ was at Level 2 (of 4)
22 March – Total cases reach 66 with no link to travel with two cases
23 March – NZ upgraded to Level 3 and level 4 announced for the 25th. Cases reach 102
24 March – cases in NZ reach 155 with community transmission. PM signaled the potential to enforce further powers.

The announcement yesterday by the PM signalled a further announcement to come of a national state of emergency. What does this mean?

Civil Defence Emergency Management Act 2002

When the PM announces a State of Emergency she is drawing on powers given to her by the Civil Defence Emergency Act 2002. This announcement would trigger New Zealand’s National Civil Defence Management Plan that sets out the arrangements, roles, and responsibilities of various agencies in responding to the emergency situation.

This plan is very long and detailed but unlocks certain powers for the Civil Defence:

it centralises control and decision making responsibilities of local boards, committees, and government agencies.
it provides additional financial support (if required) to local authorities
it increases the police and military powers to enforce regulations where it is necessary for the preservation of human life

 

In a practical sense

This means we may see increased presence of police and possibly military in our towns and cities. They could (if needed) close down access to roads and public places. They could break into private buildings or places and requisition personal property as and if required for the preservation of life. They can stop people from doing anything they deem to be contributing to the spread of COVID-19 e.g. moving around in the city without reason.

If this these powers aren’t enough, the PM has one final gun in her arsenal. The Epidemic Preparedness Act 2006 can allow for the amendment of legislation through direct order by the executive branch. Instead of having to go through the normal process of government the PM can enact new laws swiftly if they are needed to help avert the spread of COVID-19.

 

The impact on property management companies

For property management it means that business is limited to what can be achieved remotely. No in-person viewings or inspections or routine maintenance. Emergency repairs are considered essential so can be carried out.

In other cases in other countries a national State of Emergency often comes with an increase in crime. I recommend contacting your tenants and warning them to increase their home security (e.g. lock garage and car) and be more aware of the possibility of theft.

Announcement 26/03/20 – UPDATED

On the 23rd of March 2020, the Minister of Finance Grant Robertson announced a freeze of rent increases and an extension of no-case terminations in relation to the COVID-19 pandemic. This has been applied as law through the COVID-19 Response (Urgent Management Measures) Amendment Act.

This will help New Zealanders stay securely in their rental properties with a 6-month freeze on rent increases It also provides increased protection from having their tenancies terminated. The key changes for landlords and tenants to be aware of are:

⚠️ There is now a freeze on rent increases
⚠️ Any rent increase notices from a landlord will not have the effect of increasing a tenant’s rent unless the rent increase has already taken effect
⚠️ Terminations of tenancies cannot occur with the lockdown period except where limited and specific justified reasons apply. The Tenancy tribunal will act as a check to ensure these grounds are used lawfully. These reasons are:
– Where the tenant substantially damages the premises
– Assaults or threatens the landlord, the family or neighbours
– Abandons the property
– Engages in significant anti-social behaviour
– 60 days behind in rent, unless both parties agree

⚠️ Tenants will still be able to terminate their tenancy as normal if they wish
⚠️ All tenants will have the ability to revoke termination notices that they have already given, in case they need to stay in the tenancy during the lock-down period

The time frame for the new measures are:

⚠️ They take effect with 24 hours
⚠️ A rent freeze applies for six months
⚠️ Policy terminations will initially apply for three months
⚠️ At the end of the 3 and 6 month periods, the Government will evaluate whether they need to be extended.

Note: a landlord cannot terminate a tenancy because the tenant has been confirmed with COVID-19. In addition, the tenant is not required to notify their landlord if they test positive for COVID-19. We do, however, encourage tenants to advise the landlord in case the landlord or their agents need to visit the property while the tenant is in isolation.

 

Over the past week, there have been widespread changes to business systems to facilitate employees working from home. The speed with which this is being implemented is staggering and in some cases, I think there will be some problems.

I’ve been working from home for a decade in a number of roles and it’s not as simple as you would assume. Depending on the culture of the company it can be great or it can be a disaster. I’ve experienced it in both scenarios. A fantastic company with an amazing remote working culture is Timely. I was there for three years working almost entirely from home. I have read up and researched remote working for years now. There are always lots of questions about remote working below are some answers I’ve learnt over the years:

How do you make sure employees are working?

Firstly, if they are good employees they will do the work. Employees are MORE productive working remotely than when they work in the office.Here’s a great article about remote working and productivity: https://www.inc.com/marcel-schwantes/new-study-reveals-why-working-from-home-makes-workers-more-productive.html

How do I manage my team?

Technology and routine is the answer. When I managed a group of BDMs in three timezones working in a fully remote company with 50 staff this was the system we used.

1. 15five.com– a great tool to measure weekly staff engagement and manage company strategy through OKRs.
2. Trello.com – a generic tool for tasks. Manage projects, create to-do lists, assign jobs. You can do everything and anything on this.
3. Whereby.com – when Skype and Zoom were rubbish this was our goto video conferencing tool
4. Slack.com – Facebook messenger on steroids for enterprises. It’s free and amazing. I used to be on this 12+ hours a day, 7 days a week.

The routine

1. 6 monthly – physical get together as a team.
2. Quarterly OKRsrecorded in 15five.
3. Weekly
   – One-on-one video calls. 30 minutes video calls with manager and employee. Often going over to do lists in Trello or something that has come up in 15five survey.
   – The 15five survey completed.
   – a day in the office (we had an optional office)
4. Daily ‘stand-up’ on video conference. It was 10 minutes long meeting and we answered three questions each:

What did we do yesterday?
What are we doing today?
What obstacles are stopping us from achieving these goals?

What else should I know?

Over-communicate – write, write and write

Speak in person regularly – written stuff can be misconstrued. In-person is best, video is 2nd, the phone is third.

Establish a routine – work out what times are best for you.

Figure out your working style – early in the morning with time off during the day to pick up kids

Work-life balance – working all the time is easy to do but health and family are important too.

Embrace the perks – surf during the day, pick up kids, do the laundry.

What if the tenant can’t pay their rent arrears?

Rent arrears – they are a serious issue. In the past couple of days, we are seeing many businesses starting to let go of staff. It’s a terrible time if you’re in tourism or hospitality. This will result in a number of your tenants being out of a job and perhaps unable to pay rent.

What action to take?

BE COMPASSIONATE

Regardless of the rent arrears, this is a terrible time for everyone. Be understanding and helpful. In the end, supporting one another is the most important thing we do at this time.

ASSESS THE SITUATION

We recommend that you go through your tenant list in your property management software and tag them by the risk of rent arrears: HIGH, MED, LOW. This is not to stigmatise your tenants but so you can help those in greatest need. The categories might look like this:

High – works in tourism, hospitality, importing or exporting business, in an airline or airport-related job
Medium – works in all other sectors
Low – works in the health, food, courier, beneficiary

Read our blog about risk assessment.

COMMUNICATE

In this situation, the best thing we can do is keep regular contact with our tenants and landlords. Increase your frequency of communication to at least weekly but in some cases almost daily. Based on the risk assessment of the tenant I would adjust my communication style. For example, for the high-risk situations, I recommend ringing, texting, and emailing both tenants and landlords. The landlord needs to be aware of the situation and the measures you are putting in place. The tenant needs your support. For the low to the medium risk, they might only require emails.

BE CARING AND SUPPORTIVE

If the tenant has lost their job, they will be very distraught. Love and understanding is the greatest thing we can show right now.

BE FLEXIBLE

If the tenant has rent arrears then come up with something that can help them. Be flexible. A rent reduction or a rent holiday could be two options. It may mean that the rent has to drop for 6 months or more.

KIA KAHA – BE STRONG

There may be situations where the tenant has to be evicted. If you feel that the tenant is taking advantage of your good nature. Whether it’s a 14-day notice or an application to the tenancy tribunal, then be strong (but kind) and take the actions you need.

BE CREATIVE

This situation is unprecedented and as such, there is no playbook. We need to be creating and ‘making up’ solutions on the fly. At the time of writing this blog, Countdown is employing people nationwide. They are supporting this country and community by creating jobs for people. Think about how you and your business can be creative to help your owners and tenants at this.

BE POSITIVE

For every cloud, there is a silver lining. At the moment there are 80,000 ex-pats returning to New Zealand. They will all need homes. This information could lift the spirits of your owners and allow them to understand that this ‘blip’ is only temporary.

RING YOUR MUM AND DAD

Property management is all-consuming. It’s easy to work from sun-up to sun-down and beyond. It’s 6 am on a Saturday while I write this. In these tumultuous times don’t forget to call and tell those closest to you how you feel about them.