Australia: Federal Government To Consider Intervening In National Retail Lease Market - Possible National Code Of Conduct For Shopping Centre Leases To Be Introduced

Last Updated: 5 September 2008

On 27 August 2008 the Australian Government Productivity Commission released a 322 page report entitled 'The Market for Retail Tenancy Leases in Australia'.

The report should be of interest to retail landlords and particularly managers of shopping centres as the report makes several recommendations for Federal Government intervention in the regulation of retail leasing in Australia.

It is highly likely that if the Federal Government does choose to intervene, then it will act upon some or all of the recommendations of the Productivity Commission.

Possible good news for landlords

  • the States and Territories should:

(a) not pursue measures that increase the prescriptiveness of retail lease legislation or further widen the gap between the retail tenancy market and the broader market for commercial tenancies; and

(b) progressively unwind the current prescriptive retail lease legislation in the applicable State or Territory in areas that have sought to govern market behaviour, such as minimum lease terms and assignment and outgoings provisions of leases.

  • the State and Territory governments should seek, where practicable over the medium term, to establish nationally consistent retail lease legislation.

gadens lawyers notes that uniform retail lease legislation is clearly in the national interest and in the interest of national operators of shopping centres and national tenants. Further, it is likely that any relaxing of retail lease legislation is going to reduce costs and benefit landlords and sophisticated tenants in negotiating commercial deals, without being restrained by legislative provisions which may not be appropriate.

Possible bad news for landlords

The report recommends:

  • State and Territory governments should:
(a) encourage plain English drafting in all leases
(b) provide clear and obvious contact points for information on lease negotiation, lease registration and dispute resolution;
(c) encourage a one page summary of all key lease terms and conditions to be included in retail lease documentation.
  • to increase the transparency of the market, State and Territory governments should facilitate the lodgement by market participants of a standard one page lease summary at a publicly accessible site.
  • the State and Territory governments in conjunction with the Commonwealth should facilitate the introduction of a voluntary national code of conduct for shopping centre leases that is enforceable by the ACCC. The code should include:
(a) standards of conduct at all stages of lease negotiation, operation and
(b) measures to improve the transparency and accountability of tenancy
management within centres, including provision of effective rent figures
and lodgement or registration of leases;
(c) standards of conduct of dispute resolution prior to a dispute proceeding
to a mediator, tribunal or court.

gadens lawyers strongly supports plain english drafting although, we query how appropriate it might be for governments to legislate a ban on words such as 'henceforth', 'thenceforth', 'therewith' and 'hereunto' etc.

More seriously, the proposal to require a one page summary of the commercial terms of all retail leases to be made publicly available would mean information that was currently commercially confidential between landlord and tenant would be available to the public. Often a landlord and tenant will not include details of an incentive in a lease which is required to be registered so as to keep the amount of the incentive confidential. We query whether it would be an offence not to disclose an incentive in such a summary.

Finally the proposal for a 'voluntary' code of conduct which is 'enforceable by the ACCC' appears to be a contradiction. In any case, any code of conduct is likely to impose additional compliance costs on landlords and could potentially place unnecessary restrictions on the majority of reputable landlords who act ethically in lease negotiations, in order to address perceived problems with the minority who may act unethically.


The Productivity Commission's report is an interesting preview of what the Federal Government may do if it chooses to intervene in the States and Territories' regulation of retail leasing. Certainly a move towards uniform national legislation would be warmly welcomed by all national participants in the industry.

gadens lawyers will follow progress closely and advise if and when any of the Productivity Commission's recommendations are acted upon.


Steve Healy

t (02) 9931 4725


Chris Fabiansson

t (02) 9931 4772



Ian Compton

t (08) 9223 9215


Peter Le

t (08) 9223 9246


The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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