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Commercial Tenancy

Commercial Tenancy (Retail Shops) Agreements Act 1985

The Commercial Tenancy (Retail Shops) Agreements Act 1985 (the Act) regulates retail and other commercial tenancies.

The following information is not a comprehensive statement of the laws or a substitute for expert opinion. It is vital however, that all parties to the leasing of relevant commercial premises such as tenants, property owners and commercial property managers are informed about these laws.

The Act regulates retail lease arrangements between landlords and tenants and outlines some of their rights and responsibilities in relation to their lease agreement.

The focus of the Act is on retail business; however leases for some non-retail use such as businesses in shopping centres and other specified businesses are also covered by the Act.

The Act generally applies to leases for premises with a lettable area of 1000 m2 or less and are:

  • used for carrying on a business and that are in a retail shopping centre (a group of premises, 5 or more of which are used for the sale of goods by retail or a specified business);
  • not in a retail shopping centre, but that are used (or predominantly used) for the sale of goods by retail; and
  • used for conducting a ‘specified business’.

A specified businesses as prescribed in the Regulations and, as at 1 January 2013, include:

  • drycleaning;
  • hairdressing;
  • beauty therapy and treatments; 
  • shoe repair (which may include key cutting and engraving); and
  • sale or rental of videos tapes, DVDs, electronic games and other similar amusements

The Act allows for some retail shops with a lettable area greater than 1000 m2 to be prescribed as also being covered by the Act.  As at 1 January 2013 no shops had been prescribed.

The Act generally does not apply to leases to publicly listed companies.

The Act:

  • regulates commercial tenancy agreements in relation to retail shop leases;
  • provides for dispute resolution and the determination of questions arising under a lease by providing access to alternative lower cost mediation and dispute resolution mechanisms offered by the Small Business Commissioner and the State Administrative Tribunal; and
  • prohibits unconscionable, misleading and deceptive conduct in relation to retail shop leases.
     

The Act principally focuses on the need for transparency of information and fairness in the contract by:

  • requiring the landlord to provide a disclosure statement and tenant guide to the tenant;
  • establishing a consistent and fair process for rent reviews;
  • including special requirements regarding the payment of turnover or percentage rent;
  • giving most tenants an entitlement to a minimum lease period of up to 5 years;
  • regulating the distribution of specified landlord expenses (operating expenses) to tenants; and
  • providing certain provisions in a lease to be void – for example, a provision requiring the tenant to open during specified times.

Amendment Act

The Commercial Tenancy (Retail Shops) Agreements Amendment Act 2011 (the Amendment Act) commenced on 1 January 2013.  This Amendment Act implements a number of important reforms to commercial tenancy laws in Western Australia.

The amendments incorporate new provisions into the Act which:

  • prohibit misleading and deceptive conduct;
  • require landlords to include additional information in the disclosure statements provided to tenants; 
  • require landlords to give tenants notice of the date on which an option to renew a lease is no longer exercisable; 
  • allow for use of a prescribed relocation clause in leases (without the need to obtain the approval of the State Administrative Tribunal) and introduce new requirements in relation relocation clauses in leases for long term tenants (those who have been in occupation of premises for more than 5 years); 
  • prohibit landlords from passing on some of their legal fees to tenants; and
  • assist in the preparation of more consistent and equitable rent reviews by requiring landlords and tenants to supply valuers with relevant leasing information.

Amendments have also been made to the Commercial Tenancy (Retail Shops) Agreements Regulations 1985 to support the implementation of the Amendment Act.  These amendments, contained in the Commercial Tenancy (Retail Shops) Agreements Amendment Regulations (No.2) 2012 include a:

Extended trading hours

As a result of recent changes to retail trading hours legislation, retail outlets are able to take advantage of extended trading hours.  If a retail outlet chooses not to open for the extended hours, they are not required to contribute to operational expenses incurred by the landlord as a result of the shopping centre opening during those hours.  The "Allocation of operating expenses for non-standard trading hours" information sheet provides more details.

Pre 1 July 1999 leases

If your lease was entered into prior to 1 July 1999 some of the provisions of the Act may not apply.  Further information on this issue can be obtained from the Small Business Development Corporation.

Further information

Small Business Development Corporation (SBDC)

The Small Business Commissioner at the Small Business Development Corporation (SBDC) is now the first point of contact for any small business operator in Western Australia seeking advice or assistance with a business to business, or business to government complaint or dispute, as well as those concerning retail tenancies or unfair market practices affecting small business.  For more details or to access the SBDC Alternative Dispute Resolution service by calling 131 249 or visiting the SBDC website.

Publications

A copy of the Amendment Act and the Amendment Regulations is available from the State Law Publisher’s website.  Further detail about the amendments is set out in the fact sheets below.
Information fact sheets on the Amendment Act and revised forms: