Melbourne, 19 January 2004: Clayton Utz today announced the publication of the firm's third update of its Retail Tenancies Comparative Analysis. The update highlights the needless differences between state legislation on retail tenancy legislation, differences that are hurting business operating in more than one state and inhibiting commerce. The update follows significant introduction and amendments to retail tenancies laws by state and territory governments over the past three years.
"State and territory governments have failed to implement with uniformity the commitment they gave to the Commonwealth to introduce key minimum standards into their retail tenancy legislation," said John McGuire, a partner in Clayton Utz's Property, Planning and Environment practice. "That commitment was given in 1997 yet we are still waiting. In the meantime, businesses are suffering the substantial extra costs of meeting multiple but strict compliance requirements. There are heavy penalties for non-compliance."
The promised minimum standards covered by the states' commitment to the Commonweath included issues such as disclosure, rent reviews, ratchet clauses, relocation expenses, outgoings and assignment.
"While there is now legislation in every state and territory, the so-called minimum standards are often quite different. Interstate differences won't have an impact on a landlord or retailer operating in only one state, but they make an enormous difference to a national shopping centre operator that has to deal with seven systems of retail tenancy laws and procedures", said Mr McGuire. "It creates a level of unnecessary cost, cost which will either inhibit expansion or at the very least be passed on. It also makes it harder for operators to exercise the appropriate oversight to ensure compliance nationally when they have to be conversant with so many idiosyncratic regimes."
The Clayton Utz Retail Tenancy Comparative Analysis reveals comprehensively different treatment by state and territory legislation of myriad issues, including what is a retail tenancy, information to be given to a prospective tenant, costs of preparation of lease documents, minimum lease term, methods of rent review, collection of land tax and other outgoings, recovery of depreciation and capital costs, sinking funds, auditor's reports, compensation for disturbance or relocation, lease assignments, security deposits, promotion costs and dispute resolution.
For example,
- Retail premises are defined in NSW, Qld, WA and Tas by reference to the size of the premises, but in Victoria and SA by reference to the annual rent.
- If a disclosure statement is not given within the required time in NSW, the tenant has 6 months to terminate the lease, in Queensland 2 months, in Victoria 90 days and in WA 60 days.
- In NSW, Qld and the ACT a tenant needs to give the landlord a disclosure statement, but not in any other State or Territory.
- A landlord in NSW, SA and WA can compel the tenant to pay at least some of his legal costs, but not in Qld, Vic, ACT or Tas.
- All states and territories require a five year minimum term of a retail lease except Queensland, where there is no minimum term.
- Some allow rent reviews only on one method and others allow multiple methods.
- Some prohibit the recovery of certain types of outgoings and others permit recovery as long as the lease makes it clear what is to be recovered.
- Some states allow recovery of land tax on a single holding basis only, and others prohibit land tax recovery entirely.
"Some of the differences are relatively minor, but there are multitudes of them and strict compliance is required. From a national leasing portfolio perspective it is complicated and inefficient, and adds to the cost of doing business," according to Mr McGuire
