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
- Contents
- 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.
- Chapter Preliminaries
- Cover, Copyright, Ministerial letter, Terms of reference, Contents, Abbreviations and explanations
- Overview
- Chapter 1 Introduction
- 1.1 Background and recent regulatory developments
- 1.2 Recognising constraints on economic efficiency in retail tenancy
- 1.3 Relation to other inquiries
- 1.4 Study procedures
- 1.5 Structure of the report
- Chapter 2 Market for retail tenancy leases
- 2.1 Scope of the market
- 2.2 Provision and use of retail space
- 2.3 Market entry, exit and vacancies
- 2.4 Summing up
- Chapter 3 The regulatory environment governing retail tenancies
- 3.1 Origins of retail tenancy legislation and regulation
- 3.2 The nature of legislative and other responses
- 3.3 Zoning and planning
- 3.4 Summing up
- Chapter 4 Dispute resolution
- 4.1 Development of dispute resolution procedures
- 4.2 Current dispute resolution procedures
- 4.3 Summing up
- Chapter 5 Principles for regulation of the retail tenancy market
- 5.1 Views on effectiveness of retail tenancy regulation
- 5.2 Designing good regulation
- 5.3 Considerations for intervening in retail tenancies
- 5.4 Proposed principles
- 5.5 Summing up
- Chapter 6 Security of tenure
- 6.1 Participants' views
- 6.2 Evidence on lack of security
- 6.3 Assessing the case for change
- 6.4 Summing up
- Chapter 7 Occupancy costs
- 7.1 Participants' views
- 7.2 Evidence on occupancy costs
- 7.3 Assessing the case for change
- 7.4 Summing up
- Chapter 8 Market information, transparency and disclosure
- 8.1 Participants' views
- 8.2 Evidence on information failure
- 8.3 Assessing the case for change
- 8.4 Summing up
- Chapter 9 Business conduct and dispute resolution
- 9.1 Participants' views
- 9.2 Evidence on the incidence and nature of disputes
- 9.3 Concerns about business conduct
- 9.4 Assessing the case for change
- 9.5 Summing up
- Chapter 10 Assessment and alternative approaches to regulation
- 10.1 Views on aspects of regulation that hamper market operation
- 10.2 Main features of an alternative approach
- 10.3 Summing up
- Chapter 11 The Commission's recommendations
- 11.1 The scope for regulatory improvement
- 11.2 Actions to improve the operation of the retail tenancy market
- 11.3 Implementation, adjustment issues and impacts
- Appendix A - Consultation
- References
- Extension of the reporting date letter