Balancing the needs of small landlords and retail tenants

Last month, the State Government tabled its review of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (the Act). The Act was designed to address the power imbalance between large shopping centre owners and small-business tenants. It also regulates lease agreements of retail and specified other businesses outside shopping centres. Here, for smaller landlords who own a single property, this balance may shift, as tenants can sometimes have more negotiating power.

As REIWA represents a broad range of stakeholders—including commercial agents, landlords, and tenants, as well as those in residential real estate—we’re focused on advocating for a balanced, viable leasing environment for everyone in the sector.

The Act has technical distinctions: it excludes retail spaces over 1,000 sqm and leases held by large corporations like Coles. It covers not only retail stores but also specific service businesses like hairdressers and beauty therapists. Additionally, a ‘shopping centre’ applies to any location with five or more retail tenants, not just large complexes.

The review recommends:

• Expanding the Act to include more service-based businesses outside shopping centres.
• Increasing disclosure requirements, adding foot traffic data, proposed redevelopments, marketing plans, and competing business information.
• Covering certain businesses over 1,000 sqm under the Act.

While REIWA supports protections for small business tenants, we’re concerned these changes could inadvertently harm smaller landlords, affecting the viability of local shopping precincts.

For example, larger shopping centres can handle complex disclosure requirements, but small strip mall landlords may lack the resources to provide data on foot traffic or competing businesses. This added compliance could result in penalties for minor errors and discourage smaller landlords from leasing to retail tenants.

Extending the Act to cover service businesses like physiotherapy clinics or dental practices outside shopping centres could increase compliance costs for landlords unfamiliar with these requirements. This may lead to hesitancy in leasing to service-based tenants.

The inclusion of businesses over 1,000 sqm, such as large nurseries or furniture showrooms, is also concerning, as these tenants typically have more bargaining power and may not require the same protections.

REIWA is actively engaging with the State Government on these proposed changes. We advocate for a clear distinction between large shopping centres and small retail properties, suggesting two disclosure regimes: a comprehensive one for large centres and a simpler version for smaller, independent properties.

We will also advise on which service businesses should be covered by the Act and review the inclusion of larger businesses over 1,000 sqm to ensure that protections are appropriately targeted. We encourage smaller landlords and tenants to engage with REIWA and their agents, stay informed, and share their perspectives as we continue these discussions with the Government.