Page 343 - Week 02 - Tuesday, 20 February 1990
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It was also suggested to the committee that landlords can "force" tenants to pay for renovations as part of a lease renewal. I use the word "force", even though I know landlords cannot really force tenants to do anything that they do not want to do. However, it is very difficult for tenants if their life's work and financial interests are tied up in a business. These issues need to be considered very carefully in the context of a code of practice.
Another issue is outgoings and disclosure statements, as Mr Jensen has already mentioned. As the report states, outgoings are "the occupancy costs which tenants pay above and in addition to base rent" - for example, management fees and air-conditioning. These fees can be as much as 20 per cent of the base rent. The owner of a building has a right to recover increased costs over which he has limited or no control, but they must be fair and realistic when handed down to the tenants.
The committee was told of occasions on which tenants did not find out what the extra costs were until they had moved into premises, nor were they given a statement of the breakdown of costs, and sometimes the services which had been paid for were not even forthcoming. Before tenants sign leases or move into premises they should receive a disclosure statement showing the extra costs of outgoings. I believe that these should be audited annually and a copy should be forwarded to the tenants.
Terms of a lease and options for renewal is another issue that should be discussed when negotiating a code of practice. The majority of submissions from tenants suggested that the term of a lease should be a minimum of at least five years because they considered this was the time required before a business actually became financially viable. This could be a full five years or, say, three years with a two-year option. Some tenants argued that they should have an infinite option of renewal, whereas the landlords considered, and rightly so, that the tenants have a legal agreement for only the term of the lease and should not automatically expect a renewal.
Another issue was a standard lease. Many witnesses commented on the benefits of a standard lease. Victoria and New South Wales encourage the use of a standard lease and find that it works successfully. It is standard only in that it can be adapted and changed to suit particular situations.
Another issue which was brought to the attention of the committee, although it is not listed in paragraph 4.9, was the lack of business management training which is essential for manager-owners if their businesses are to be successful. It was suggested that many people enter into small businesses without full knowledge of business practices or what the business will require of them. On the other hand, the committee was told that courses are available to assist business people but that due to
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