Page 984 - Week 06 - Wednesday, 26 July 1989
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Assembly to hold back the erosion of retail tenants' rights. We are talking here, Mr Speaker, about basic human rights and social justice, I suggest, and I am sure that they are very important and dear to the heart of the Chief Minister.
The Rally's survey provides ample evidence of just how much those rights can be curtailed by unscrupulous landlords, through such practices as excessive rent increases. Rent increases in most retail businesses were well in excess of the increases in turnover and the consumer price index. Over the last five years, rent increases ranged from 39 per cent to 200 per cent, and averaged around 87 per cent, outstripping the total CPI increase of 54 per cent by a very large margin by any stretch of the imagination. Rent increases are often set after annual market reviews undertaken by BOMA using some undisclosed formula of its own.
Perhaps the most urgent need shared by the ACT's retail tenants is for rent increases to be subject to a known and justifiable formula or to be related to CPI increases and agreed upon by both landlord and tenant at the beginning of the lease.
The next area of concern is renewal of leases. Many tenants experience problems as a matter of course when it comes to the point of having to renew their leases. These problems seem to arise mainly from a determination on the part of some landlords to wring every benefit they can out of their position of advantage. Although most cases stop short of cruel and unusual treatment, the kind of excessive behaviour which a lack of control on landlords allows is shown up by a case where, with nine months of a ten-year lease left to run, the lessee has asked for a renewal but the landlord refuses to negotiate, apart from offering $70,000 to buy the business for his son. The business in question is currently valued at $250,000, almost four times the amount that the landlord is currently prepared to offer. This is nothing short of economic blackmail, with the landlord's unchecked hold on the lease as a weapon which the tenant has no power to resist.
Renovation and capital improvements are other areas of concern. Landlords usually benefit from renovation work and other capital improvements to rental premises undertaken by their tenants. The real value of such work to the tenants is less certain, especially if the improvements are demanded by a landlord towards the end of a lease. From our survey, we know that this can happen, and the landlord has a legal right to expect the work to be done. On the other hand, the tenant has no guarantee of reaping the benefit of improved premises. The landlord is not obliged to renew the lease, and stands to gain even more from the increased rents which the improvements to the property allow him to charge a new tenant.
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