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Why was the Retail Leases Act amended?

The retail industry is undergoing rapid change and the legislation needed to be refreshed and updated to remain relevant.

There were a number of systemic industry issues and market inefficiencies that needed to be addressed.

What was the consultation process?

From November 2013, the NSW Small Business Commissioner conducted a review of the Retail Leases Act 1994. The review included publication of a discussion paper which was the subject of detailed public consultation.

The consultation process involved:

  • holding industry and regional forums
  • setting up an Industry Working Group
  • publishing an online survey
  • calling for written submissions.

Through this consultation, the review heard from 282 people and organisations with about 100 people attending the forums and 182 provided written submissions.

What were the main issues raised?

Tenants consistently raised three key issues:

  • imbalance in access to information
  • imbalance in negotiation power at the end of lease
  • lack of clarity and efficiency in the legislation.

Landlords generally said there was enough regulation and no change was needed.

What will the amendments achieve?

The amendments are designed to achieve more transparency, certainty and fairness for all parties in retail in the state.

The key principles guiding the changes:

  • seek to better level the playing field between parties where there can be a significant inequity of power
  • seek to improve the sharing of information between the parties and regulation around how they are to deal with one another in relation to things like rent increases, demolition clauses, relocation, disturbance and assignment

What particular changes will assist small business owners?

There is greater clarity around some of the original intentions of the Act which have been eroded by the interpretation of the drafting language.

For example:

  • the requirement that landlords must disclose in detail the costs that a tenant is expected to pay under the lease is clearer
  • the assignment process has been simplified, which was previously hard to understand
  • landlords cannot pass on the cost of obtaining mortgagee consent to the lease
  • to help reduce the cost and time it takes to have a rent determination, the appointment of specialist valuers is being transferred to the NSW Small Business Commissioner.