Market rent reviews

ACT

See sections 52-55, 57-59. If the parties are unable to agree on market rent, either party may request the Magistrates Court to refer the dispute to mediation. If mediation does not result in agreement, the market rent is to be determined by valuation in accordance with the principles set out in Schedule 1. 

Under Schedule 1, market rent is the rent that could reasonably be expected to be paid for vacant possession of the premises on the open market if:

• the premises were let by a willing but not anxious landlord to a willing but not anxious tenant;
• both parties acted knowledgeably and prudently; and
• the use to which the premises may be put under the lease is taken into consideration. 

Schedule 1 also sets out the matters that the valuer must:

• take into account; and
• not take into account.

If a valuer working out market rent asks the landlord for information about any relevant concession the landlord has given to another tenant, the landlord must give the valuer the information.

Where rent is being worked out by mediation or a valuer under section 52 or section 53, but this is not done by the review date, rent is payable at the old rate until the new rent is worked out, with appropriate adjustment to then be made between the parties within 30 days. 

The Act provides a mechanism (on the application of a party) for disqualification of a valuer and appointment of a new valuer where the appointed valuer has a conflict or fails to comply with valuation obligations under the Act. 

NSW

See sections 31 and 31A. The CMR of a retail shop is the rent that would be reasonably expected to be paid for the shop, as between a willing landlord and a willing tenant in an arm's length transaction (where the parties are each acting knowledgeably, prudently and without compulsion) determined on an effective rent basis having regard to specified matters.

The specified matters are:

• the provisions of the lease;
• the rent that would reasonably be expected to be paid if the shop were unoccupied and offered for renting for the same or similar use;
• the gross rent less outgoings payable; and
• rent concessions and other benefits.

The CMR excludes goodwill or value of the tenant's fittings and fixtures.

Where the landlord and tenant cannot agree on the amount of rent, the amount is to be determined by an SRV.

Within 14 days after request by an SRV, the landlord must supply relevant information requested in a list provided by the valuer to assist in determining the CMV, including information about leases for retail shops situated in the same building or shopping centre to assist the SRV to determine the CMR.

The SRV's determination is to be in writing, contain reasons for his or her determination and detail the matters considered in making such determination.

The costs of the SRV are to be split between the parties.

The SRV's determination must be made within 1 month after accepting the appointment to make the determination.

The Registrar may appoint SRV's on application under the Act and may attach such conditions that the Registrar considers appropriate to the appointment of a SPV. 

NT

See section 29. "Current market rent" is the rent that could be reasonably expected to be paid for the shop, determined on an effective rent basis having regard to:

• the provisions of the lease;
• the rent that would reasonably be expected to be paid for the shop, in a free and open market between a willing landlord and a willing tenant in an arm's length transaction, if it was unoccupied and offered for rent for the same or substantially similar use to which the premises may be put under the lease;
• the gross rent less the landlord's outgoings payable by the tenant; and
• rent concessions and other benefits that are frequently generally offered to prospective tenants of unoccupied retail shops.

The tenant's goodwill is not to be taken into account and nor is the value of the tenant's fixtures and fittings.

If the landlord and tenant cannot agree the market rent is to be determined in writing by a specialist retail valuer appointed by agreement between the parties. The cost of the valuer is to be shared by the parties.

If the parties cannot agree upon the appointment of a specialist retail valuer, the appointment will be made by the Commissioner of Business Tenancies.

In determining the amount of current market rent, a specialist retail valuer must take into account the matters set out above.

The landlord must, within 14 days of a request by the specialist retail valuer, supply the valuer with all relevant information about leases for retail shops situated in the same building or retail shopping centre. 

QLD

See sections 28-36A. If rent is to be reviewed to the CMR and the parties cannot agree on what this figure will be, the CMR is to be determined by an SRV (who will be appointed by the Chief Executive if the landlord and tenant cannot agree).

A provision of a lease is void to the extent that:

• the tenant is to pay the SRV's costs (other than their half share); or
• determination of CMR is other than in accordance with the Act.

In making a determination of CMR, the SRV must determine the rent:

• reasonably expected to be paid for the retail shop if it were unoccupied and offered for the use for which it may be used under the lease or a substantially similar use;
• on the basis of gross rent less the landlord's outgoings payable by the tenant; and
• on an effective rent basis.

The SRV must:

• not have regard to the value of the goodwill of the business or the tenant's fixtures and fittings;
• have regard to the terms and conditions of the lease;
• have regard to submissions from the parties as to market rent; and
• have regard to other matters prescribed by regulation.

The SRV may require the landlord to give the SRV relevant information about the leases in the shopping centre, and if no information is given, within 7 days after this failure a "retail tenancy dispute" is said to exist.

The information obtained by the SRV is to be confidential.

The SRV's determination must:

• be in writing;
• state the matters taken into consideration in making the determination;
• state detailed reasons for the determination (including whether the CMR includes GST); and
• be made within 1 month of the final information being provided to the SRV or the finalisation of the submissions period in section 28A.

SA

See section 23. Similar to NSW, except no provision requiring rent concessions and other benefits to be taken into account. The Act provides for appointment of a valuer if the landlord and the tenant cannot agree. The costs of a valuation must be shared by the landlord and tenant. 

TAS

See sections 13, 14 and 21. Market value rent is defined in section 1 to mean the rent determined in accordance with the principles set out in Appendix A of the Code. If the parties cannot agree on the market value rent, then either party may initiate an independent valuation by the appointment of a valuer. 

VIC

See section 37. A retail premises lease that provides for a rent review to be made on the basis of the current market rent of the premises is taken to provide that the current market rent review is the rent obtainable at the time of the review in a free and open market between a willing landlord and a willing tenant in an arm's length transaction having regard to:

• the provisions of the lease;
• the rent that would reasonably be expected to be paid for the premises if they were unoccupied and offered for lease for the same, or a substantially similar, use to which the premises may be put under the lease;
• the landlord's outgoings to the extent to which the tenant is liable to contribute to those outgoings; and
• rent concessions and any other benefits offered to prospective tenants of unoccupied retail premises.

The current market rent is not to take into account the value of goodwill created by the tenant's occupation or the value of the tenant's fixtures and fittings.

If the landlord and tenant do not agree on the amount of rent, the provisions are similar to NSW except that:

• if there is no agreement on the valuer, it is appointed by the SBC; and
• the valuer must carry out the valuation within 45 days of accepting the appointment, or within such longer period as may be agreed between the landlord and tenant or as determined by the SBC. 

WA

See section 11. In respect of a market review under a retail shop lease:

• The Act's definition of CMR prevails over any definition in the lease.
• CMR is defined in section 11(2)(a) to be the rent obtainable at the time of review in a free and open market as if all the relevant factors, matters or variables used in proper [land] (sic) valuation practice have been taken into account, and as if the retail shop were vacant and to be let on similar terms as are contained in the current retail shop lease.
• For determining the CMR no account is taken of:
  • the goodwill of the business carried on by the tenant; 
  • any stock, fixtures or fittings in the retail shop that are not the property of the landlord; or
  • any structural improvements or alterations of the retail shop carried out or paid for by the current tenant.
• Provisions in the lease preventing or limiting either the increase or decrease of the CMR (ie. ratchets and caps or collars) are void.
• Unless specific provision is made in the lease for the time at which a CMR review may be initiated in respect of a review date, a party to the lease may, not more than 3 months before and not 6 months after the review date, initiate the review by serving notice on the other party.
• If the parties cannot agree on the rent payable for any CMR review, the rent shall be determined by either a single licensed valuer agreed on by the parties (or nominated at the request of each of the parties by the SBC) or by two licensed valuers, one appointed by the landlord and the other by the tenant.
• If the parties do not agree on a single valuer or do not appoint their single valuer or do so but the two valuers do not reach agreement on behalf of the parties then a party may refer the rent review to the WA SAT for determination.

Under section 11 a valuer, at the request of a party and on payment of the required fee, must provide written reasons for the valuer's decision.

The landlord is obliged to provide, within 14 days after request by the relevant valuer(s) seeking to agree or determine the CMR, such relevant information required by the valuer(s) to assist in the review. The information that can be required of the landlord includes any of the following information about leases for any retail shops in the same building or RSC (whether or not the premises are comparable):

• current rental for each lease;
• rent free periods or any other form of incentive;
• recent or proposed variations of any lease;
• outgoings for each lease; and
• any other information that may be prescribed in the Regulations. If the landlord fails to comply with a request without reasonable excuse then the tenant can apply to the WA SAT for an order compelling the landlord to supply the information requested.

Section 11A deals with confidentiality and it allows disclosure by a recipient of confidential information as part of the reasons for the determination, as long as the particular tenant or business is not identified. The recipient of confidential information can also disclose confidential information for the purpose of the legal proceedings.

If the WA SAT is required to make a determination in respect of the CMR, the WA SAT:

• must act according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms;
• will not be bound by rules of evidence;
• may inform itself on any matter in such manner as the WA SAT thinks fit; and
• may require the parties to furnish such valuations, documents or other information as the WA SAT thinks fit and the parties must comply with the request.

A provision in a retail shop lease preventing the tenant from disclosing the rent under the lease is void.

Definitions and currency