Concerns raised over retail review pressure
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Tuesday, 3 September, 2002 - 22:00
A REVIEW of the Commercial Tenancy Agreements Act (1985) foreshadowed by the State Government is threatening to negatively affect the value of retail property in WA.
According to Property Council of WA executive director Joe Lenzo, a small but vocal group of small businesses is lobbying the Government to undertake the review.
The review, if it went ahead, would target one of the most regulated and reviewed sectors of the property industry, Mr Lenzo said.
“It’s quite ludicrous. We completed a detailed review only two years ago that went on for about 18 months,” he said.
“Another government then gets in and makes promises to review.
“It’s for no reason; right now in WA there is no crying demand … the majority is very happy.
Mr Lenzo said the spectre of yet another review injected further uncertainty into the retail property market for investors, owners and tenants.
“There is no group that is crying out for this review apart from a few small businesses,” he said.
“The landlords have got costs and those have to be passed back onto tenants.
“We have overly complicated leases already; a lease document these days is a 200-page thing. It will just mean more money in the hands of lawyers.”
Mr Lenzo said the Property Council had told the Government to postpone a review and to wait a until the statutory review was due in two and a half years’ time.
“That will give industry a total of five years of certainty,” he said.
“In the meantime, if there are any serious issues we can address them.
“At the end of the day most retail property is owned by larger collective vehicles that are quite mobile. If you keep putting more rules in place the money will go where it’s easier.”
The draft Retail Lease Bill in Victoria is expected to increase the number of clauses in the act to 101, double the number of clauses from 1998 when the present act was handed down, according to the Shopping Centre Council of Australia.
Phillips Fox retail and commercial leasing solicitor Lyn Adamson said the Victorian Government had released a draft retail leasing bill that included clauses to stop landlords passing the cost of land tax on to tenants.
“The unconscionable conduct matter in the Trade Practices Act has also been put into the Retail Tenants Act,” she said.
“This will mean tenants will have access to a tribunal rather than having to go through the courts.
“I think if landlords can’t pass those quite significant costs on it might affect who buys retail property.”
Burgess Rawson property management division director Michael McCormick said the industry was still reeling from the last review.
“Under those amendments owners can no longer claim management fees for new property from tenants,” he said.
“It had a major impact on owners and it’s one of the main reasons why the owners decided to change the method of leasing from net rent plus outgoings to semi gross rent.
“In semi gross rent the tenant doesn’t pay for things like repairs and maintenance; that’s all included in the rent.
“But it’s funny, because 15 years ago there was a move away from this by tenants who wanted to know what they were paying.
“Any change has to be managed and the people who drive the change often don’t give any thought to the impact.”
A spokesperson from Planning and Infrastructure Minister Alannah MacTiernan said the review of the Commercial Tenancy Agreements Act was imminent.
While the Property Council claims the review is a step backwards for investment in WA, a sector of the retail market has welcomed news of the review.
WA Retailers Association chief executive officer Martin Dempsey said the review was good news for retailers facing big rent hikes on their properties.
According to Property Council of WA executive director Joe Lenzo, a small but vocal group of small businesses is lobbying the Government to undertake the review.
The review, if it went ahead, would target one of the most regulated and reviewed sectors of the property industry, Mr Lenzo said.
“It’s quite ludicrous. We completed a detailed review only two years ago that went on for about 18 months,” he said.
“Another government then gets in and makes promises to review.
“It’s for no reason; right now in WA there is no crying demand … the majority is very happy.
Mr Lenzo said the spectre of yet another review injected further uncertainty into the retail property market for investors, owners and tenants.
“There is no group that is crying out for this review apart from a few small businesses,” he said.
“The landlords have got costs and those have to be passed back onto tenants.
“We have overly complicated leases already; a lease document these days is a 200-page thing. It will just mean more money in the hands of lawyers.”
Mr Lenzo said the Property Council had told the Government to postpone a review and to wait a until the statutory review was due in two and a half years’ time.
“That will give industry a total of five years of certainty,” he said.
“In the meantime, if there are any serious issues we can address them.
“At the end of the day most retail property is owned by larger collective vehicles that are quite mobile. If you keep putting more rules in place the money will go where it’s easier.”
The draft Retail Lease Bill in Victoria is expected to increase the number of clauses in the act to 101, double the number of clauses from 1998 when the present act was handed down, according to the Shopping Centre Council of Australia.
Phillips Fox retail and commercial leasing solicitor Lyn Adamson said the Victorian Government had released a draft retail leasing bill that included clauses to stop landlords passing the cost of land tax on to tenants.
“The unconscionable conduct matter in the Trade Practices Act has also been put into the Retail Tenants Act,” she said.
“This will mean tenants will have access to a tribunal rather than having to go through the courts.
“I think if landlords can’t pass those quite significant costs on it might affect who buys retail property.”
Burgess Rawson property management division director Michael McCormick said the industry was still reeling from the last review.
“Under those amendments owners can no longer claim management fees for new property from tenants,” he said.
“It had a major impact on owners and it’s one of the main reasons why the owners decided to change the method of leasing from net rent plus outgoings to semi gross rent.
“In semi gross rent the tenant doesn’t pay for things like repairs and maintenance; that’s all included in the rent.
“But it’s funny, because 15 years ago there was a move away from this by tenants who wanted to know what they were paying.
“Any change has to be managed and the people who drive the change often don’t give any thought to the impact.”
A spokesperson from Planning and Infrastructure Minister Alannah MacTiernan said the review of the Commercial Tenancy Agreements Act was imminent.
While the Property Council claims the review is a step backwards for investment in WA, a sector of the retail market has welcomed news of the review.
WA Retailers Association chief executive officer Martin Dempsey said the review was good news for retailers facing big rent hikes on their properties.