True cost of leases sought

A BID by the Barnett government to redress the age-old power imbalance between retail tenants and their landlords may force shopping centre owners to reveal the intricate details of their lease agreements.

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

There has long been disquiet among tenants that valuers can not get sufficient information from retail landlords to draw up the market valuations they produce to support rent increases or lease agreements.

Many leases include incentives and rental discounts that are closely guarded by landlords and the act is seeking to give valuers access to these details.

Lavan legal partner Peter Beekink said the act would require the landlord to reveal all information relevant to leasing in the centre to the valuer.

“That would enable them to determine what a market value would be, including incentives and discounted rent, which landlords can be a bit wary about,” Mr Beekink said.

“They would not want that information made public, so the information is made on a confidential basis so the valuer can’t go and reveal that information to anyone they want.

“That is supposed to them give a proper market review of the rent.”

The amendments have not been passed but have been through a second reading and are expected to get through without any major amendments.

The changes date back to the 2003 review of the Retail Shops Act but two attempts by the Carpenter government to get these amendments through failed because it was coupled with the trading hours legislation and got caught up in that fiery debate.

It was not until the Barnett government uncoupled it from trading hours that it moved forward.

“Landlords have a lot of power because they own the premises and that is the case for small business and no matter what you do that is always going to be the reality,” Mr Beekink said.

It’s a reality the Australian Retailers Association (ARA) is lobbying to shift through a number of measures, including a national register of retail leases.

ARA executive director Russell Zimmerman said a register of leases, including all information such as shop size and rent-free periods, would provide a true understanding of the actual value of a lease agreement.

NSW, South Australia and Queensland have registers but they are not mandatory and, as such, incomplete.

“Out view is knowledge is power and our view is landlords currently have all the knowledge and all the power,” Mr Zimmerman said.

The concept of a register has not been included in the proposed changes to the Retail Shops Act but it could be amended to include one in the future.