There is scope to improve the operations of the retail tenancy market, according to a recent report released by the Productivity Comission.
Releasing the draft report, the Market for Retail Tenancy Leases in Australia on 13 December 2007, the Commission said it proposed maintaining and improving those aspects of the regulatory framework that are working well such as:
Various dispute resolution mechanisms introduced in each jurisdiction;
Mandatory provision of disclosure statements; and
The Availability of additional lease information.
The Commission also recommended changes that would:
Further improve transparency, disclosure and dispute resolution;
Reduce information imbalances and unwind constrains on efficient decision making;
Reduce the 'prescriptiveness' of legislation;
Move to a voluntary national code of conduct for shopping centre leases;
Move to a nationally consistent retail and commercial lease framework; and
Increase efficiency and reduce costs.
"The Commission's preferred approach to retail tenancy regulation involves less prescriptive retail tenancy legislation, greater alignment with law governing commercial tenancies and, where practicable, national consistency," the report stated.
Commission finds "little evidence" of fundamental problems
Presiding Commissioner Neil Byron said while there is "room for improvement", the Commission found "little evidence" of fundamental operations problems. Mr Byron also highlighted the low rate of tenancy disputes across the country.
"Business failures are not exceptional, vacancy rates in shopping centres are low, lease renewal rates are high," Mr Byron said. "There are relatively few formal disputes while the disputes that occur are not concentrated in any format or region."
Commission ignoring landlord's excessive bargaining power?
Media and tenancy commentators have called the move as effectively backing major lessors such as large shopping centres and malls.
According to a news item released by the Sydney Morning Herald on the day of the report's release, the findings are a "blow" for small businesses who have complained that landlords have excessive bargaining power over them.
Final report due in March ¿ submissions open
The Commission is currently seeking responses to its draft recommendation. The Commission is preparing to hold public hearings in all major capital cities in February 2008. Commission expects to submit its final report to the Federal Government in March this year.
According to the Productivity Commission, there are about 290,000 leases nationwide, with up to 58,000 written yearly. About 20 per cent are in shopping centres.
For more information visit www.pc.gov.au