Disclosure Statements – moving towards a unified Retail Tenancy Code

From 1 January 2011, landlords will be required to issue tenants with this new form of disclosure statement. Very little time has been allocated for landlords to organise their affairs. Landlords will therefore need to be pro-active about these changes, and update their internal procedures. To correctly complete the new lessor disclosure statements, landlords and their managing agents will have to collate the additional information now required.

The Shopping Centre Council of Australia has stated that it is unfortunate that only three governments have so far agreed to adopt the new disclosure statement, and that it is hoped the other states and the territories will soon follow suit.

Why the change?

The good news - it is anticipated that the changes will benefit both landlords and tenants.

Landlords operating retail properties in multiple states will be able to reduce their management costs as a result of this standardisation.

Tenants will now receive more detailed information. This means that they will be better equipped to understand their obligations and rights, and can make more informed decisions regarding their lease.

What are the key changes?

For all three states, the new form of disclosure statement will require landlords to disclose additional information such as:

1. the list of items that are included within the premises for instance, air-conditioning;
2. the quality and standard that landlord expects of the tenant’s fit out;
3. any incentives that the landlord is providing to the tenant;
4. any rent free and outgoing free periods, that might apply during a fit out period for instance;
5. any casual mall licensing for common areas that the landlord has in place;
6. any current legal proceedings regarding the lawful use of the Shopping Centre or the premises; and
7. a warning to the tenant that they should be sure that their use of the premises complies with relevant planning laws.

Landlords in New South Wales will be the least affected by these amendments as their current disclosure requirements are already comprehensive. Similarly, the pending amendments to be made to Victoria’s disclosure statement will not be too drastic. Queensland will be substantially affected by these changes.

If you are a landlord in either Victoria or Queensland, you will need to be mindful of other new requirements in addition to those mentioned above. For example, landlords will need to mention the expiry dates of leases of anchor tenants in the new disclosure statements.

If you have any queries about how these changes will affect you, please contact one of the members of our Property and Projects team.

Contact details

Melbourne

Margot Sharpe
Partner
T:  +61 (0)3 9321 9820
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Sydney

Robina Kidd  
Partner
T:  +61 (0)2 8083 0454
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Brisbane 

Michael Byrom
Partner
T:  +61 (0)7 3135 0616
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Disclaimer: The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity.  Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this newsletter is accurate at the date it is received or that it will continue to be accurate in the future.