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Reforms have been made to the NSW Retail Lease Act, which are set to benefit jewellers
Reforms have been made to the NSW Retail Lease Act, which are set to benefit jewellers

Jewellers benefit from significant lease reforms

For the first time in more than a decade, significant changes have been made to the NSW Retail Leases Act that are expected to provide jewellers with a fairer and more transparent relationship with landlords.

Under the reforms, landlords will be obliged to disclose outgoing costs before a retailer signs a lease, and leases with a term of more than three years will need to be registered with Land and Property Information.

John Barilaro, NSW Minister for Small Business
John Barilaro, NSW Minister for Small Business

The bill will also include the removal of the minimum five-year lease term, as well as mandating that turnover data collected by a landlord must be connected to the bricks-and-mortar store as opposed to online sales. 

As previously reported by Jeweller, the Retail Leases Amendment (Review) Bill 2016 was presented to the Parliament of NSW by Minister for Small Business John Barilaro on 8 November 2016. The bill, which introduced changes to the Retail Leases Act 1994, passed parliament on 21 February 2017.

Barilaro said it was important to ensure legislation remained relevant given the retail industry was subject to rapid change.

“The updated act is designed to bring the greatest transparency, certainty and fairness between our retail businesses and landlords,” he explained.

Industry support

Colin Pocklington, managing director of Australia and New Zealand’s largest buying group, Nationwide Jewellers, said the group supported the amendments; however, it was disappointing that the government was unable to include several other changes.

“Retailers were seeking a stop to the need to supply monthly sales figures to landlords, when percentage rent was not payable,” Pocklington explained, adding, “This gives the landlords an advantage in lease negotiations. Retailers were also seeking a right of refusal at the end of a lease.”

Colin Pocklington, Nationwide Jewellers managing director
Colin Pocklington, Nationwide Jewellers managing director

Australian Retailers Association (ARA) executive director Russell Zimmerman issued a statement noting that the improved lease protections and streamlined processes would create stronger relationships between retail tenants and landlords.

“As the retail industry is constantly evolving, it’s great to see the NSW Government implementing progressive changes that ensure the legislation remains relevant to all retailers throughout Australia,” Zimmerman said.

“The amended act will give retailers a better understanding of retail centre values and side deals, ensuring leasing costs are transparent for both large and small retail businesses,” he added.

An ARA spokesperson said it was difficult to determine whether other states would follow suit.

“We do know that South Australia was waiting to see the outcome of this NSW bill, so it will be interesting to see what they do next,” the spokesperson added.  

A new code
Russell Zimmerman, ARA executive director
Russell Zimmerman, ARA executive director

Barilaro added that the Retail Code of Industry Practice was also being developed in an attempt to increase the sharing of information between landlords and tenants. The reporting of sales and occupancy costs by category was highlighted as a main focus.

“The code will support enhanced competition for retailing space, and more market-based outcomes from rent negotiations,” Barilaro explained.

Signatories to the code will reportedly represent parties negotiating retail leases inside large shopping centres.

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.

At the time of publication, the ARA spokesperson confirmed that industry groups were finalising the details of the code, and it was expected to be completed in the coming weeks.

The lease reforms were expected to take effect from 1 July 2017.

More reading
Jewellery stores to benefit from lease reform
New jewellery lease database receives go ahead
The rent trap: Jewellers versus landlords
Jewellery retailers help reform leases

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