News

Amendments to the Retail Leases Act

by Chris Drayton
05 May 2017
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Authors: Chris Drayton, Partner & Michelle Barraclough, Associate

Given the imminent commencement on 1 July 2017 of significant amendments to the NSW Retail Leases Act 1994, it is an appropriate time to provide a refresher summary of the significant amendments.

No Minimum Term – There is no longer a minimum 5 year term for a retail lease.  

Undisclosed Outgoings – The tenant will not be required to pay any amount to the landlord on account of an outgoing if the liability was not disclosed in the disclosure statement provided by the landlord.

In addition, if there is an estimate of an outgoing provided in the disclosure statement and the actual amount turns out to be greater then the tenant is only required to pay the estimated amount unless the landlord can show there was a reasonable basis for having disclosed the lesser amount.

Specific Exclusion of Certain Usages – Schedule 1A has been inserted into the Act specifically excluding certain usages from being subject to the provisions of the Act, for example, ATMs. 

Act Does Apply to Agreements for Lease – It is now clarified that the Act does apply to an agreement for lease.  Accordingly, the lessor's disclosure statement must be served 7 days before an agreement for lease is entered into.  In such circumstances, a disclosure statement is not required or permitted when the resulting lease is entered into.  

Demolition of Part of Building – It has been clarified that the demolition section of the Act applies not only when the whole building (of which the retail shop forms part) is to be demolished but also where only part of the building is being demolished (being a part of which the retail shop forms part).

Revenue From Online Transactions – Revenue from online transactions is only to be included in turnover for the purposes of determination of rent for those transactions where goods or services are delivered or provided from or at the retail shop or the transaction takes place while the customer is in the retail shop.  

Amendment of Disclosure Statement – A lessor's disclosure statement can now be amended by agreement in writing both before and after the lease is entered into.

No Mortgagee Consent Fees – It is now express that a landlord cannot charge mortgagee consent fees for consent to the lease.

Registration – Leases for a term of more than 3 years (including option term) must be registered by the landlord within 3 months after the lease signed by the tenant is returned to the landlord.

Copy of Lease – The tenant must be provided with an executed copy of the lease within 3 months after the lease is returned to the landlord following execution by the tenant.

Return of Bank Guarantee – The landlord will be required to return the bank guarantee to the tenant within 2 months after the tenant completes performance of its obligations under the lease.

Failure to Provide Disclosure Statement – If a landlord fails to serve a lessor's disclosure statement within 7 days before the lease is entered into or if the disclosure statement is materially false, misleading or incomplete, then in addition to the tenant being able to terminate the lease within the first 6 months the tenant will now also have a right to claim compensation including in connection with the fitout of the retail shop.

The above points represent a summary of the amendments that impact the day-to-day operation of the lease for a landlord and tenant.  Should you require any further information or have any queries please do not hesitate to contact us.