Retail Leases

Introduction/Applicability

The Retail Leases Act(“the Act”) applies to:-

  • all retail premises Leases entered into after 1 May 2003;
  • all retail premises where the premises are used predominantly for the retail sale of goods or provision of services; and
  • retail premises where the occupancy costs are less than $1 million per annum.

Lease Agreement/Disclosure Statement

  • A draft Lease and the Information Brochure prepared by the Office of the Small Business Commissioner must be given to the Tenant as soon as negotiations commence.
  • The Tenant will be entitled to a minimum 5 year term (inclusive offurther terms under the Lease).
  • At least 7 days before a Lease is signed, the Landlord must provide to the Tenant a complete Disclosure Statement in the form prescribed under the Regulations to the Act.
  • If the Landlord fails to provide the Disclosure Statement, the Tenant has 90 days from the date of entering into the Lease to give the Landlord written notice of failure to provide the Disclosure Statement.

Rent Review Mechanism under the Act

A Rent Review may be made by one of the following rent review mechanisms:-

  • current market rent;
  • predetermined fixed amount adjustment;
  • CPI;
  • fixed percentage adjustment to the base rent.

Rent Review – Prohibitions

The Act prohibits the Landlord from:-

– adjustable at the Landlord’s discretion; or
– to have a ratchet clause which does not permit the rent to fall.

Prohibition in recovery of some outgoings/expenses

The Act prohibits the Landlord from:-

  • recovering the Landlord’s legal costs for the preparation of the Lease and Disclosure Statement;
  • recovering any amount of land tax payable on the premises; and
  • recovering management fees unless the management fees relate solely to the management of the premises and is exclusive of salaries and other administration costs related to the operation of the premises.