One of the most significant and far-reaching retail legislative changes will quietly come into effect in New South Wales on 1 July 2017, writes Simon Fonteyn, managing director, Leasing Information Systems.
The amendments to the Retail Leases Act of NSW are numerous and in essence, will change the dynamics of retail leasing as we know it.
Of the many changes being made, the change I believe that will have the biggest impact on the sector is the requirement for all leases under the Act, over three years in length, to be registered within three months from leases being signed.
This will increase transparency in the sector and help to continue levelling the playing field between tenants and landlords.
Even more transparency will result with the change that requires landlords to accurately disclose and estimate outgoings in a disclosure statement, failing which, that outgoings will not be recoverable.
The removal of the requirement for a minimum five-year lease term in the new Act will likely result in both longer and shorter-term leases. This is a positive for the market as it will allow greater flexibility in this volatile and ever-changing market.
Also included in the Act is a change to how bank guarantees need to be handled. Once the Act is in place, landlords will be required to return bank guarantees to the tenant within two months after the tenant completes performance. Another change for landlords means they will no longer be able to request online sales revenue information from tenants, except for goods delivered from the premises or where the centre or the transaction takes place while the customer is in the premises.
Redundant manual processing of rental bonds will be replaced with a change to the Act that will see the rental bond scheme move to an online platform cutting out the need for physical documents to be lodged.
Another change includes increasing the penalty notices for offences. These include the right to compensation if a landlord fails to provide a disclosure statement within seven days before the lease is entered into or if it is misleading or incomplete.
The amendments to the Act will create a more transparent and balanced retail leasing market, enabling greater flexibility and operational efficiency for both tenants and landlords, in a sector that is undergoing significant cyclical and structural change.