NSW Government drives discussion on the future of retail leasing

Read the discussion paper that suggests amendments to the NSW Retail Leases Act 1994.

The New South Wales Government is now carrying out its review of the Retail Leases Act 1994, after inviting interested parties to read the online discussion paper and provide a response to a survey comprising 27 questions.

Earlier this month, NSW Minister for Small Business Katrina Hodgkinson called on anyone with an interest in retail leasing in NSW to have their say on the review of the Retail Leases Act 1994. Submissions to the discussion paper closed Friday, February 7th.

“The review aims to create a level playing field in the retail space by setting minimum standards for the leasing of properties and providing for cost effective and timely dispute resolution,” Ms Hodgkinson said.

In addition to reducing red tape and the cost of doing business, the discussion paper considers ways to improve transparency, accountability and reduce unfair practices.

“Following consideration of public submissions and feedback on the final discussion paper, the NSW Government will release its response,” Ms Hodgkinson said.

As part of the consultation process, representatives of the Office of the Small Business Commissioner will hold public forums in Coffs Harbour on 11 February, Tamworth on 18 February and Newcastle on 19 February. To attend one of the public forums, phone 1300 795 534.

Overview of retail sector in NSW

Retail businesses and retail landlords in NSW are facing a number of challenges including financial pressures on certain “bricks and mortar” businesses, low economic growth and consumer confidence, the entry of overseas retailers and rapidly growing online sales.

It has been reported that many small businesses, and both landlords and tenants, in the retail sector are struggling and the rate of business closure is increasing.

On the other hand, there are also opportunities for retail landlords and businesses, with new retail models emerging and expanding their online sales, which account for only about 6% of all retail sales. Currently, three quarters of total online retail sales in Australia are made by Australian online retailers. Yearly growth rates for online retail are about ten times higher than traditional “bricks and mortar” retail.

The growth of service industries may also drive changes in the retail sector in NSW. This may increase competition for space and create a confusing environment for small landlords. Given these changes to the retail sector, the Retail Leases Act 1994 should be reviewed to ensure its provisions remain appropriate for the retail and small business sector.

NSW Retail Leases legislation

The Retail Leases Act 1994 (the Act) was established to ensure fair and efficient dealings between parties to retail leases. The provisions of the Act are designed to address the following market problems:

  1. Information asymmetries between landlords and tenants;
  2. Unclear retail leasing arrangements;
  3. Unequal negotiations strength;
  4. Economic exploitation of some lessees by some lessors, particularly those in large shopping centres; or Unfair practices that have occurred.

In 2008 the Productivity Commission’s report, The Market for Retail Tenancy Leases in Australia (PC Report 2008), found that the case for government regulation of retail leasing had been well established on efficiency and equity principles.

Read more of the 2013 Review of the Retail Leases Act 1994 here.