Reply: 2.1.1
From: Kristine .
Yes, but ....
Dale, what options are available to a landlord? The law says that a landlord may not unreasonably withhold consent to a further term, or to the tenant remaining on, on a periodic basis.
A landlord cannot 'option' to require a tenant to continue.
Therefore, the tenant, being the one who pays, has the right to continue or right to decline to continue.
What other 'options', that is, alternatives, are there?
Generally speaking, the landlord rents the tenant the bare shell. All fixtures, fittings and improvements belong to the tenant. Just as an example, a local hot bread shop (you probably have bought his award winning pies) invested over $100,000 in plant, equipment, shop outfitting etc. Would the baker do that, if he didn't think there was a possibility of continuing indefinitely in the premises? If he thought that the landlord might be a 'tricky' sort of person, likely to refuse to continue the tenancy & thus effectively 'confiscate' the shop outfit, trade and goodwill at the end of the term, would the tenant take that chance?
By providing a good lease, with plenty of options, the tenant can improve the business, grow the goodwill, and sell the business to a new operator, who can then calculate "Well, I'm paying $150,000 for the business, plant and goodwill, divided by the term of the lease, equals so much per year for the cost of the business. If I can afford to buy, amortize the purchase price, and still make a living, I'm a happy Vegemite.
In my opinion, it is in the best interests of the landlord to have a proper, fair and equitable lease drawn up at the beginning, with plenty of opportunity available to the tenant to establish themselves, providing prosperity to both parties.
And if the property comes under the Retail Tenancies Act, there is a fairly level playing field regarding market rents, ratchet clauses, minimum terms, outgoings, operating costs etc. It is easy to overlook the costs of vacancy. Some retail, commercial and industrial areas have not yet recovered from the 'recession we had to have', although vacancy rates are definitely improving. For my money, a 5x5x5x5x5 lease would allow a quality tenant to commit themselves to the business effectively for their working life, and the opportunity to sell, not close, at the end of it.
And ditto for the landlord
Just my thoughts on the subject
Kristine