Body seeks protection for small business

Posted On Friday, 22 November 2002 10:01 Published by
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The Restaurant and Food Services Association of SA, which represents small tenants, is pushing for the establishment of a statutory body to protect its members from abuse by landlords
The Restaurant and Food Services Association of SA, which represents small tenants, is pushing for the establishment of a statutory body to protect its members from abuse by landlords.

Association chairman Costa Paizes says it appears that abuse of small tenants by commercial property owners is increasing. He is backed by Cape Town-based attorney Reid Corin, who says it is a struggle to get security of tenure for commercial tenants.

Commercial tenants' welfare is generally left to adherence to terms and conditions of lease agreements between tenants and landlords.

However, Paizes says lease agreements are not enough to protect tenants, whose businesses can collapse if their landlords refuse to renew their leases. 'The tenant has no recourse whatsoever.'

The small tenant's trading space in a shopping centre is sacred to his business, and removal from that space can spell doom for him. Cases where tenants are unfairly denied lease renewal should be referred to a neutral body for arbitration, says Paizes.

'That is where the gap for a statutory body exists,' he says.

Corin says the lack of security of tenure for commercial tenants is something government will have to look at, and that the SA Law Commission has promised to look into the matter.

'The solution will have to involve statutory protection,' says Corin. He feels tenants should be entitled to renew a lease for as long as they are prepared to pay a market-related rental.

He would like to see retail developers being required to publish prospectuses stating the trading expectations of new developments. This, he says, would enable tenants to walk away from lease agreements if predevelopment promises are not met.

At the recent African Congress of Shopping Centres congress in Johannesburg, Ellerine Brothers chairman Eric Ellerine said small tenants deserved better treatment than they were getting. His criticism was backed by Wolf Cesman, executive director of Corpcapital, and Dirk Prinsloo, director of consulting group Urban Studies.

Landlords tend to give away a great deal to national retailers anchor tenants in an attempt to stabilise new developments, and then try to make up these losses from their smaller tenants.

Business Day

Publisher: Business Day
Source: Inet Bridge

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