The Real Estate Institute of NSW (REINSW) is calling on the government to introduce a retail lease agreement that would allow retailers and landlords to save thousands of dollars and avoid waiting months for leases to emerge.
Just like standard residential lease agreements enable tenants to move in quickly once signed, a standard retail lease could enable retailers to get to work straight away.
“The overwhelming majority of retail tenants and landlords find themselves at the mercy of unnecessary legal negotiations even though they’ve reached an agreement,” REINSW CEO, Tim McKibbin (pictured above) said.
“This means businesses otherwise ready to trade, and landlords requiring income in the form of rent, are made to wait. The end of JobKeeper heightens the urgency of addressing these pointless delays.”
In a submission to the Office of the NSW Small Business Commissioner, the REINSW has 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’.
“Retail businesses everywhere need support and government must look for every opportunity to reduce costs for businesses as they tackle the non-stimulus future,” McKibbin said.
“Wasting time and money on legal fees for an unnecessarily complex retail lease, when a simpler and cleaner pathway is available, is unacceptable.”
McKibbin used the concept of rent as an example, with those who currently prepare retail leases developing various industry terms – face rent, base rent, gross rent, effective rent, and turnover rent, among others.
“It is a typical scenario for tenants and landlords to agree the fundamental terms of a lease, only for their legal representatives to be unable to resolve the peripheral terms. This puts a roadblock in front of an otherwise mutually beneficial relationship,” he said.
“There is an opportunity for 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.
“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.”
The introduction of a standard retail lease would have significant advantages in dispute resolution, according to the REINSW, as there would be no need for the NSW Civil and Administrative Tribunal to interpret and apply disputed clauses. A standard agreement would also promote a better understanding of the rights and obligations of landlords and tenants.