THE WA property sector is gearing up to fight expected lobbying from retail groups that would give tenants the first right of refusal at the end of a lease period.
THE WA property sector is gearing up to fight expected lobbying from retail groups that would give tenants the first right of refusal at the end of a lease period.
As part of its election campaign, the Gallop Government signalled it would widen the issues to be included in a review of the Commercial Tenancies (Retail) Act.
While the first right of refusal issue is not yet on the agenda, the Property Council of WA suspects it soon may be.
Such legislation would put the decision of whether to stay in a premises in the hands of tenants, and not landlords, as currently is the case.
Any move in this direction is strongly opposed by the property sector and the Property Council has employed the services of an independent consultant to seek information on lease expiries and the proportion of leases that are not renewed at the tenant’s choice and those not renewed at the landlord’s choice.
The data will be used in the review of the Act.
Property Council policy and communi-cations officer Geoff Cooper said giving tenants the first right of refusal would remove management control from landlords.
“Any such legislation would make it very difficult for a landlord not to renew a tenant’s lease … and there is a lot of concern about that,” Mr Cooper said.
Legislation giving tenants first right of refusal has been passed in South Australia and the Australian Capital Territory and is up for consideration in Victoria.
Thomas Werrett managing director Mark Werrett said the first right of refusal for tenants interfered with the whole concept of property ownership.
“Owners should have the right to do what they want with their own property,” he said.
“What happens if you get tenants who don’t do the right thing, who don’t spend money to keep up the premises which has an adverse effect on other nearby tenants?
“Why should they be given an automatic right to stay there for as long as they want?”
And landlords should be able to change the retailers in line with changing trends, Mr Werrett said.
Shopping Centre Council of Australia executive director Milton Cockburn agreed, and said giving additional end-of-lease rights to tenants reduced the ability of retail premises, such as shopping centres, to evolve.
“A shopping centre owner needs the flexibility to make hard decisions … in any shopping centre the mix of retailers must change in order to keep a centre relevant to its customer base,” Mr Cockburn said.
WA Retailers Association chief executive officer Martin Dempsey suggested some retailers would raise the issue when the legislation came up for review.
Mr Dempsey said greater end-of-lease rights for tenants would help put an end to landlords bullying tenants into accepting massive rent hikes.
“I understand that landlords do not want to be bullied into giving tenants another term,” he said.
“But with no rights, landlords have tenants over a barrel. They can either pay the higher rents or move on.
“At the moment, retailers can invest time and money into a business for five years and, at the end of a lease, can be told that’s it.”
And first right of refusal for tenants would not hamper redevelopments if they were handled well.
“What it would stop is landlords using redevelopments as an excuse to shaft people and move them out,” Mr Dempsey said.
As part of its election campaign, the Gallop Government signalled it would widen the issues to be included in a review of the Commercial Tenancies (Retail) Act.
While the first right of refusal issue is not yet on the agenda, the Property Council of WA suspects it soon may be.
Such legislation would put the decision of whether to stay in a premises in the hands of tenants, and not landlords, as currently is the case.
Any move in this direction is strongly opposed by the property sector and the Property Council has employed the services of an independent consultant to seek information on lease expiries and the proportion of leases that are not renewed at the tenant’s choice and those not renewed at the landlord’s choice.
The data will be used in the review of the Act.
Property Council policy and communi-cations officer Geoff Cooper said giving tenants the first right of refusal would remove management control from landlords.
“Any such legislation would make it very difficult for a landlord not to renew a tenant’s lease … and there is a lot of concern about that,” Mr Cooper said.
Legislation giving tenants first right of refusal has been passed in South Australia and the Australian Capital Territory and is up for consideration in Victoria.
Thomas Werrett managing director Mark Werrett said the first right of refusal for tenants interfered with the whole concept of property ownership.
“Owners should have the right to do what they want with their own property,” he said.
“What happens if you get tenants who don’t do the right thing, who don’t spend money to keep up the premises which has an adverse effect on other nearby tenants?
“Why should they be given an automatic right to stay there for as long as they want?”
And landlords should be able to change the retailers in line with changing trends, Mr Werrett said.
Shopping Centre Council of Australia executive director Milton Cockburn agreed, and said giving additional end-of-lease rights to tenants reduced the ability of retail premises, such as shopping centres, to evolve.
“A shopping centre owner needs the flexibility to make hard decisions … in any shopping centre the mix of retailers must change in order to keep a centre relevant to its customer base,” Mr Cockburn said.
WA Retailers Association chief executive officer Martin Dempsey suggested some retailers would raise the issue when the legislation came up for review.
Mr Dempsey said greater end-of-lease rights for tenants would help put an end to landlords bullying tenants into accepting massive rent hikes.
“I understand that landlords do not want to be bullied into giving tenants another term,” he said.
“But with no rights, landlords have tenants over a barrel. They can either pay the higher rents or move on.
“At the moment, retailers can invest time and money into a business for five years and, at the end of a lease, can be told that’s it.”
And first right of refusal for tenants would not hamper redevelopments if they were handled well.
“What it would stop is landlords using redevelopments as an excuse to shaft people and move them out,” Mr Dempsey said.
