Retail tenancy leases in Australia
Inquiry report
This inquiry report was released on 27 August 2008.
Download the report
The Market for Retail Tenancy Leases in Australia (PDF - 1394 Kb)
The Market for Retail Tenancy Leases in Australia (Zip/Word - 961 Kb)Key Points
- The market for retail tenancies is dynamic and complex. It is an amalgam of large and small businesses participating as landlords and tenants.
- There are around 290 000 retail tenancy leases in Australia with up to 58 000 written each year.
- About one fifth of leases are in shopping centres with the remainder in retail shopping strips and other retail formats.
- Retail tenancy leases - legally binding documents that define the relationship between the landlord and tenant - are governed by State and Territory retail tenancy legislation.
- The main intention of specific retail tenancy legislation is to address bargaining imbalances between large shopping centre landlords and small retailers.
- The legislation is highly prescriptive and has grown in volume - now amounting to some 700 pages across jurisdictions.
- Significant and widening differences between jurisdictions persist, despite attempts at harmonisation.
- Aspects of the legislation have constrained the market, lowered productivity and added to compliance and administrative costs.
- Nevertheless, a number of innovations appear to have been useful, in particular:
- simple, low cost and accessible dispute resolution
- disclosure statements
- lease information
- the encouragement of registration of leases in some jurisdictions.
- In an environment where the market is working reasonably well overall, further attempts to prescribe lease terms and conditions would not improve outcomes.
- The Commission considers the most fruitful approach to improving the operation of the retail tenancy market and reducing costs would be to:
- further improve transparency, disclosure and dispute resolution, to reduce information imbalances and unwind constraints on efficient decision making
- reduce the prescriptiveness of legislation and move to a nationally consistent retail lease framework, to increase efficiency and reduce costs
- adopt a more focused approach to the shopping centre segment of the market, through the introduction of a national shopping centre code of conduct, to ease tensions and reduce costs in that segment and to support the move to less prescriptive legislation and national consistency.
- In addition, the potential to relax planning and zoning controls that limit competition and restrict retail space and its utilisation warrants further examination.
