21/07/2011 - 00:00

Retail law plans divide tenants, landlords

21/07/2011 - 00:00

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THE Barnett government’s planned push to give retail tenants more say and power in lease negotiations continues to divide the industry.

Retail law plans divide tenants, landlords

THE Barnett government’s planned push to give retail tenants more say and power in lease negotiations continues to divide the industry.

Proposed changes to the long-standing Commercial Tenancy (Retail Shops) Agreements Act focus in part on the vexed issue of market rent reviews for retail properties.

It has long been an issue in the retail sector that valuers cannot get sufficient information from landlords to draw up the market valuations for lease agreements.

The Commercial Tenancy (Retail Shops) Agreements Amendment Bill 2011 aims to give more bargaining power and information access to tenants in relation to their shop leases.

The Bill would require landlords to supply valuers with leasing information that would assist in the preparation of leases, rent reviews and would reveal discounts and incentives that are often closely guarded.

Late last week the government called for more comment over the impact of the planned reforms as part of a ‘regulatory impact statement’.

Commerce Minister Simon O’Brien said the government released the consultation paper in response to concerns raised by small business tenants about the lack of transparency in shop-lease information.

“Without access to information on comparable rents, tenants and valuers may be unable to determine what constitutes fair market rent for a particular retail shop,” Mr O’Brien said.

WA Retailers Association CEO Martin Dempsey said the Act had been detrimental to small retailers.

“Because of this [Act], small businesses are going broke, they are being forced into administration, liquidation and bankruptcy, it’s one-sided and the landlords are not accountable and been getting away with blue murder for ages,” Mr Dempsey said.

“It’s make or break time for small business in WA, these changes are a good start but they need to be followed up with a real understanding of the sector.”

Lavan Legal partner Peter Beekink said the amendments were beneficial for small businesses, but argued landlords could encounter difficulties relating to the management of their shopping centres.

“It’s [the Bill] driven by small business and by and large landlords accept what it is and it’s not unexpected,” Mr Beekink said.

“However, the things I think are silly include the ability for the tenant not to have to exercise the right to extend his lease until 30 days out, given the landlord has an obligation to give 6 months notice of the expiration and that means a difficulty in running the shopping centre properly.”

The government is also seeking comment on a proposal to establish a publicly accessible lease register that would be maintained by landlords and include details such as the annual rent of the premises.

This worries landlords who say a register would drive up costs and posed issues of confidentiality. The government is also lukewarm on the idea after a review of submissions it received on the reforms last year.

But Mr Dempsey claimed a register would be a vital source of information for tenants.

“The register is to provide transparency to the market so everyone can see that everyone else is paying their fair share, if it doesn’t go ahead, tenants will continue to unnecessarily experience financial hardship,” he said.

Mr Beekink said a public register was not an appropriate measure and that leases should be registered on the title instead.

Submissions to the paper close on August 19.

 

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