By Tony Butler, Partner
The fashion industry is notorious for recycling trends from the past, and it seems the Queensland Government has taken a similar approach with the recent release of amendments to the retail leasing framework which echo changes put forward by the previous Government late last year.
What is it?
The Retail Shop Leases Amendment Bill 2015 (Qld) (Bill) was introduced to Parliament on 13 October 2015. The Bill has now been referred to the Education, Tourism and Small Business Committee (Committee) for detailed consideration. The Committee is due to issue a report on the Bill on 5 February 2016.
As with the amendments released last year, the aim of the Bill is to reduce red tape, protect smaller retail lessees, increase operational efficiencies and balance the interests of retail lessees and lessors. These are positive changes for the retail leasing sector, but industry representatives say further work is needed before the aims of the Bill are fully realised.
Our summary of the changes proposed in 2014 can be found here.
What has changed?
The main differences between the Bill and the 2014 bill are:
- exclusion of certain types of leases from the application of retail leasing regime, namely:
- retail leases with a floor area of greater than 1000m2;
- ATMs, vending machines and advertising displays; and
- premises not wholly or predominantly used for carrying on a retail business where less than 25 per cent of the total leased floor area of the relevant level or building constitutes a ‘retail area’ at the time of entry into the lease.
- clarification around when assignment of a retail shop lease is entered into;
- a new requirement on an outgoing lessee assigning a retail shop lease to provide a lessor with a disclosure statement given to a proposed assignee on the day the lessor is asked to consent to an assignment;
- clarification around what constitutes a ‘defective’ disclosure statement;
- introduction of the ability for a lessor to recoup lease preparation costs where a prospective lessee does not sign the final lease; and
- updated provisions which provide for the release of not only an assignor but also their guarantor(s), if any, from liability under an assigned lease arising from the assignee’s default (provided that certain conditions precedent are met by the assignor).
Although the Bill goes some way towards achieving its stated aims, the general consensus amongst some of the key retail industry bodies is that more changes are required. One of the main issues highlighted in the submissions made to the Committee on the Bill is the need for larger retailers and public companies (and their subsidiaries) to be expressly excluded from the retail shop leasing framework. Other missed opportunities for reduction of red tape have also been identified. It remains to be seen if the Committee will recommend that the Government adopts the additional amendments called for when it releases its report in February next year.
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