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Why NSW needs standard retail leases: REINSW

08 April 2021 Bianca Dabu

The Real Estate Institute of New South Wales (REINSW) has devised a solution that could see retail businesses save thousands of dollars as they await the economic fallout of JobKeeper’s end.

Through a government-prescribed retail lease agreement, retailers and landlords could avoid having to wait for months for leases to emerge “from an unnecessarily long and costly legal process”, according to the REINSW.

In a submission to the Office of the NSW Small Business Commissioner, the group proposed the introduction of a standard retail lease as a “natural evolution” of the Retail Leases Act and to “better reflect Parliament’s legislative intent”.

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“Retail businesses everywhere need support as JobKeeper ends. Government must look for every opportunity to reduce costs for these businesses as they tackle the non-stimulus future,” REINSW CEO Tim McKibbin said.

According to him, a vast majority of retail tenants and landlords are falling at the mercy of unnecessary legal negotiations even after they have reached an agreement.

For instance, the concept of rent being expanded to no less than 10 industry terms — including “face rent”, “base rent”, “gross rent”, “effective rent”, “turnover rent” and more — has presented a significant roadblock to “an otherwise mutually beneficial relationship” between tenants and landlords, Mr McKibbin noted.

“What’s the point of this? This is a typical scenario for tenants and landlords to agree to the fundamental terms of a lease, only for their legal representatives to be unable to resolve the peripheral terms,” he added.

Mr McKibbin said the end of JobKeeper “heightens the urgency of addressing these pointless delays”.

According to the CEO, it would be critical for the recovery of the industry to help retail tenants and landlords overcome these roadblocks and be back to business sooner through more cost-effective ways.

“Wasting time and money on legal fees for an unnecessarily complex retail lease, when a simpler and cleaner pathway is available, is unacceptable,” the CEO commented.

Apart from streamlining processes, a standard retail lease would also have significant advantages in dispute resolution, as there would be no need for the NSW Civil and Administrative Tribunal to “labour over precise interpretation and application of disputed clauses”, according to the REINSW.

The institute also argued that a standard retail lease would promote a better understanding of the rights and obligations of landlords and tenants, which could assist non-English speakers especially.

“There is an opportunity for the government to prescribe a standardised, broadly applicable, simple-to-decipher retail lease to help retail tenants and landlords get back to business sooner and more cost-effectively,” Mr McKibbin said.

“Like there is for residential landlords and tenants, the opportunity to streamline retail lease agreements in the interests of retail tenants and landlords has never been more timely.”

Why NSW needs standard retail leases: REINSW
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