29/04/2013 - 10:29

More disclosure urged for retail tenants

29/04/2013 - 10:29

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More disclosure urged for retail tenants

Soaring rents in the retail sector have prompted calls for a register of leases and a rebalance of power between landlords and store owners.

National franchise Bakers Delight led calls this week for landlords to share detailed information and was swiftly backed up by state Labor spokesperson for small business Kate Doust.

Bakers Delight general manager Gerry Gerrard told Business News its national property management team helped about 125 tenants renegotiate leases every year and that typically involved a 5 per cent increase in rents.

Over six years that amounted to a 30 per cent jump regardless of how the retail sector was performing.

“It is vital for retailers to stand their ground when negotiating lease terms and conditions but this requires intensive research into the location, including comparable rents of other tenants in the vicinity, traffic data, sales growth and talking to other retailers,” Mr Gerrard said.

Ms Doust shared the sentiment that small businesses were under pressure in the retail sector and called on the Barnett government to establish a shopping centre lease register.

She said a public register would create a greater level of transparency and enable prospective tenants to compare costs in order to make more informed business decisions.

Since July last year, WA’s Small Business Development Corporation has received 2,215 queries about retail tenancy issues, with rentals and termination of tenancies among the most common concerns.

Just less than 570 of those were direct disputes between landlords and tenants, and 113 required the commission’s intensive service to help resolve the issue.

Nine were unable to be resolved and progressed on to the State Administrative Tribunal for determination.

The owners of WA Cleanskin Cellars have been personally involved in a tenancy dispute with a significant landlord, who can’t be named for legal reasons.

Steve and Marie Cloughley found themselves locked in an 18-month court battle with the landlord in attempts to exit their lease because of the low volume of shoppers at the shopping centre in Armadale.

Mr Cloughley said the crux of the issue was large landlords with too much power and no obligation to provide information to prospective tenants.

“These landlords of major shopping centres have too much power and, until they actually get knocked down a few pegs with changes to the retail tenancy Act, nothing’s going to change,” he said.

“When your lease comes up you’re at the mercy of your landlord; so you’ve put all your money into a business location and then they can just say ‘go’.”

Changes to WA’s retail tenancy Act came into effect earlier this year, which aimed to give tenants more rights.

However, they are still, in some cases, forced to sign directors’ guarantor statements vowing to stump up with rental costs even if their business fails – something with which Mr Cloughley strongly disagreed.

He said mum and dad business owners should not have to sign them because they were often the cause of their debts inflating even after they decided to call it quits.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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