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Tenancy review division

THE property sector and retailers have re-acted swiftly to the State Government’s proposed review of the Commercial Tenancy Agreements Act, but from opposite sides of the argument.

The Government confirmed this week that a review of the Commercial Tenancy Agreements Act was imminent.

While the Property Council of WA claims any talk of a review is a disaster for the property industry in WA, the WA Retailers Association tells a very different story.

It’s the big end of town taking on the little guys, according to WA Retails Association chief executive officer Martin Dempsey.

“The last review was tenant friendly and this one is also looking like it will be tenant friendly,” Mr Dempsey said.

Reviews of the Commercial Tenancy Agreements Act are at various stages in South Australia and Queensland.

“The gang of three of the Property Council, the Shopping Centre Council of Australia and the Retail Traders Association have turned to South Australia and WA with a twin agenda of [deregulated] trading hours and retain tenancies,” Mr Dempsey said.

He said retail tenants were footing the bill for a big range of expenses.

“Essentially what has happened over the last 30 years in commercial leases is the rent has gone from net to gross rents, with the majority being semi-gross,” Mr Dempsey said.

“Under net rents the outgoings, rates, advertising and promotional costs and so on are all itemised and the tenant has got to keep on writing cheques – up to about 10 cheques a month.

“Under a fully grossed lease the tenant writes one cheque a month but he or she doesn’t know what the charges are for.

“And landlords can hide a multitude of sins.”

The most recent review of the Commercial Tenancy Agreements Act made it illegal to charge tenants management fees for centre management.

Mr Dempsey said shopping centre owners got around this by changing the rent charged to a gross or semi-gross rent and burying the cost.

“It’s those sorts of loopholes that upset the small independent retail tenants because rents never seem to go down,” he said.

These issues weren’t just confined to WA, however, and Mr Dempsey said a national approach needed to be adopted.

“I’ve actually been invited to Sydney to a forum to discuss a national code for tenants. It has been called by the ACCC,” he said.

“There are a lot of very strange things. If rents are governed by the market, for example, then they must be allowed to go up and down.”

Although super funds and property trusts had displayed an appetite for retail property in recent years, Mr Dempsey said this shouldn’t influence any review of the Commercial Tenancy Agreements Act.

“When asset managers of super funds say assets only go up, it’s just fiction,” he said.

“Most super funds went backwards

this year because of world events.

“We have a very high standard of living and we don’t mind paying our way, but when you’re getting stuck with rent increases of 30 per cent people have got a feeling they’re being targeted.”

Property Council of WA executive director Joe Lenzo said the review was totally unnecessary and would inject uncertainty into the retail property market in WA.

He said the Property Council had demonstrated a willingness to address any important issues as they arose.

This was the case with the unconscionable conduct issue, he said.

“We agreed that it should be drawn down into the legislation. We agreed to that and we will continue to do that,” Mr Lenzo said.

“This wouldn’t be happening if it weren’t for the fact the Government made a pre-election promise.”

The Property Council insists that only a small, but vocal, group of small business owners wants a review of the Commercial Tenancy Agreements Act.

“This review, if it does happen, means that this part of the industry will become the most reviewed and regulated part of the industry,” Mr Lenzo said.

Shopping Centre Council of Australia executive director Milton Cockburn said he was dismayed that a review would even be contemplated in WA.

“Around Australia we are confronting reviews of the retail leasing legislation on an increasingly frequent basis,” he said.

“In WA a review is not due until 2004 and in our view it’s absurd that only three years down the track we are going to have another review.

“It’s happened all around Australia. In Victoria they’ve just finished a review after just two years, in NSW we’ve managed to convince the government to postpone the review.

“We’ve just got to stop the incessant reviews.”

p See Property, page 20.

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