KIM MACDONALD
The State Government has defended retail tenancy laws following complaints that the rigid rules were leaving many shops empty.
New figures from commercial agency JLL yesterday revealed city vacancies had hit an all-time high of 17 per cent — or nearly one in five shops.
Researcher Ronak Bhimjiani said the figure was up from 12.9 per cent a year ago.
Landlords claim that under current laws, any lease period beyond a six-month pop-up arrangement automatically qualifies a tenant for a five-year lease.
Any alternative period of time — such as two or three years — would require both parties to go through an assessment through the State Administrative Tribunal.
Many landlords find the process cumbersome and fear the SAT will impose a five-year lease, even if they have issues with the tenant or want to take back control of the property at an earlier time.
This prompts many to rent out their shops as pop-up venues on sixmonth leases. Others take their time finding the right tenant for the full term.
WA Commerce Minister John Quigley said the Act would be reviewed this year, but he defended the current arrangement.
“The Commercial Tenancy (Retail Shops) Agreements Act 1985 works to benefit and protect the interests of both the landlord and the tenant,” he said.
“It provides a great deal of flexibility for both parties to negotiate a lease agreement to suit their specific needs.”
Mr Quigley explained that after six months in a premises, a tenant, who has probably invested a large amount of money on fit-outs and other costs in establishing the business, has the statutory right to request a lease extension of up to five years.
“This provision gives the tenant certainty to recoup the set-up costs of their business whilst also giving certainty to the landlord in having a longer-term lease in place,” he said.
“The tenant, however, is not obliged to exercise this statutory option and may decide to negotiate a shorter lease with the landlord — for example, a two-year duration with options to renew.
“The parties can agree to a total lease term of less than five years, but this must be the decision of the tenant and approved by the State Administrative Tribunal to ensure that the tenant is not unknowingly relinquishing their rights to the statutory extension provisions.
“In the majority of cases, commercial landlords and tenants negotiate a mutually agreed duration of the lease and sign contracts accordingly. This can be for a few months in the case of a pop-up shop or a long-term lease of any duration should both parties wish to make a longer-term commitment.”