The Retail Leases Amendment (Review) Bill 2016 was presented to NSW Parliament by Minister for Small Business John Barilaro on 8 November. The bill introduces changes to the Retail Leases Act 1994.
In his parliament address, Barilaro explained that amendments to the act would increase transparency and certainty between landlords and tenants during the lease negotiation stage.
“This bill introduces important reforms to support the future of small businesses in the retail industry,” he stated.
Under the plans, landlords would be required to disclose “certain” costs and rental terms before a retailer signed a lease.
The bill includes an industry-first voluntary code of conduct, whereby landlords and retailers would exchange occupancy costs and sales data during the lease negotiation process. Tenants required to report turnover figures, for example, would not have to provide information regarding online transactions.
“One of the principal imbalances between landlords and retail tenants during negotiations relates to market information,” Barilaro noted, citing examples such as access to information about the value of leases in the market, the turnover a lease is likely to produce and the landlord's collection and use of a tenant's turnover figures.
“The result of this imbalance is that tenants feel landlords hold all the important industry information and tenants are unable to compete on a level playing field. As a result of this review, those involved in the industry have worked together and an outcome has been achieved to increase access to market information,” he added.
The code was developed following discussion between the Shopping Centre Council of Australia, National Retail Association, Australian Retail Association, Franchise Council of Australia and the Pharmacy Guild of Australia.
Increased fairness and transparency
Australian Retailers Association (ARA) executive director Russell Zimmerman welcomed the motion and issued a statement noting NSW retailers had rallied in support of the amendments.
“Minister Barilaro and the NSW government need to be congratulated for steering through changes, which should make retail leases more transparent and fairer in NSW,” Zimmerman said.
He added the code of conduct would benefit jewellers because it meant they could request retail category values from landlords thus enabling them to understand “real lease values”.
Zimmerman told Jeweller the code was formed following a “long and protracted” review.
“It’s a reasonable outcome and we are quite happy with everything,” he said.
Zimmerman added although there was no guarantee, he suspected the proposed NSW amendment would encourage the examination of retail lease agreements in other Australian states.
Carson Webb, general manager of Showcase Jewellers buying group, echoed these sentiments, explaining he hoped the bill would become a “catalyst” for other states to follow suit.
“Showcase applauds the proactive approach taken by Minister Barilaro and he has been working hard – along with Russell Zimmerman from the ARA – to make something happen for retail for some time now. It’s great to see there’s finally some meaningful cut-through,” Webb said.
He described the proposed bill as a great step forward for the independent jeweller but stated the “real game changer” would be if the other states took similar action.
According to the Parliament of NSW website, the Bill must sit for five days from the date it was introduced before it can be debated. A spokesperson from the minister’s office told Jeweller that given it was introduced on 8 November, it is unlikely it will be heard again until next year.
Barilaro’s parliament address can be viewed here.
More reading
New jewellery lease database receives go-ahead
The rent trap: jewellers versus landlords
Jewellery retailers help reform leases