Retail leases may be set for a complete overhaul, after concerns were raised about the current regulatory settings across the country.
In response to complaints raised by stakeholders including small business tenants to the Australian Government, the Productivity Commission has been asked to conduct a six-month inquiry into the market for retail tenancy leases.
"No control" over commercial leases, says small business
Making the announcement on 19 June 2007, Federal Treasurer Peter Costello and Small Business Minister Fran Bailey highlighted that although retail tenancy leases fall under state legislation, the inquiry is a response to a “range of concerns” about aspects of retail tenancy raised with the Australian Government.
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 range of “disparate” retail tenancy laws between states and territories.
Commission to conduct independent inquiry
According to Mr Costello and Ms Bailey, the Productivity Commission will conduct an independent analysis of the market for retail tenancies.
The terms of reference received by the Productivity Commission on 21 June 2001, outlines that the Treasurer has requested the Commission to examine:
- The structure and function of the retail tenancy market. This includes the role of retail tenancies as a source of income for landlords, investors and tenants. It also includes examining relationships with the broader market for commercial tenancies;
- Any competition, regulatory and access constraints on the market;
- The extent of any inconsistency in information between landlords and retail tenants and the impacts on business operation;
- Reform of retail tenancy regulation to improve economic performance. This includes addressing any differences in retail tenancy regulation between States and Territories. The Commission has also been asked to find any scope for nationally agreed regulations and approaches.
- The extent/adequacy of dispute resolution systems for landlords and retail tenants. This also includes looking at any 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 to determine rights when the lease ends are appropriate;
- How to improve overall transparency and competitiveness of the market for retail tenancy leases.
In its draft and final report, the Treasuer requested that the Commission make recommendations for improving the current retail tenancy regime and identify the likely benefits/costs of its recommendations for all stakeholders.
According to the Treasurer, the Commission's consultation process will allow stakeholders, including small businesses, landlords, tenants, investors and consumers, to raise any concerns about the current regulatory settings for retail tenancy market.
The Commission will produce both a draft and a final report, which will both be considered by the Government.Final reports must be tabled within 25 sitting days of the Treasurer receiving the report.
Interested parties can find out more by visiting the Productivity Commission at www.pc.gov.au.