Retail tenancy shake-up to address small business concerns

Concerns about current regulatory settings across the country means that retail leases may be set for a big revision.

Stakeholders raised complaints about retail leases, including small businesses, to the Australian Government, the Productivity Commission. As a result the Commission has been asked to conduct a six-month inquiry into the market. Small businesses have advocated for no government control over commercial leases.

The inquiry is in response to a “range of concerns” about aspects of retail tenancy raised with the Australian Government. Making the announcement on 19 June 2007, Federal Treasurer Peter Costello and Small Business Minister Fran Bailey made it clear that retail tenancy leases fall under state legislation and need revision.

These concerns include:

* Small business tenants face difficulties when presented with commercial leases over which they feel they have “little or no control”; and
* The fact that retail tenancy laws vary between states and territories.

It was announced that the Productivity Commission will conduct an independent analysis of the market for retail tenancies, and on 21 June 2001, the Commission issued guidelines for the investigation that the Treasurer has requested it to examine, as follows:

* The role of retail tenancies as a source of income for landlords, investors and tenants. It also includes examining relationships within the broader market for commercial tenancies;
* To discover any competition, regulatory and access constraints on the market and reform of retail tenancy regulation to improve economic performance.
* The extent of any inconsistency in information between landlords and retail tenants and the impacts on business operation;
* Examining any differences in retail tenancy regulation between States and Territories.
* The adequacy of dispute resolution systems for landlords and retail tenants. This also includes examining disparity in dispute resolution regimes between the States and Territories;
* Whether the key factors currently considered when determining retail tenancy rents are appropriate;
* Whether current provisions in retail leases include rights for the lessee when the lease ends are appropriate;
* How to improve overall transparency and competitiveness of the market for retail tenancy leases.

The Commission has also been asked to find any other source for nationally agreed regulations and approaches.

Per its draft and final report, the Treasurer requested that the Commission make conclusions with respect to the current retail tenancy system and identify the likely benefits/costs of its recommendations for all stakeholders.

The Commission’s consultation process will allow interested partiesto raise any concerns about the current regulatory settings for retail tenancy markets, according to the Treasurer.

A report in both draft and final form will be produced by the Commission, with both to be considered by the Government. Final reports must be tabled within 25 sitting days of the Treasurer receiving the report.

 

Reference: Press Release from Ministers office – http://ministers.treasury.gov.au/DisplayDocs.aspx?doc=pressreleases/2007/052.htm&min=phc&DocType=0