The Retail Leases Amendment Bill 2019, which will amend the Retail Leases Act 2003 has now passed through parliament and will be enacted into law in the coming months.
The key changes resulting from the Retail Leases Amendment Bill include:
Essential Safety Measures
Landlords can now pass on the cost of repairs and maintenance of Essential Safety Measures as part of the outgoings to the Tenant, so long as it is drafted into the lease and included in the disclosure statement.
The cost of ESMs to be paid by the Tenant do not apply retrospectively, and will only apply moving forward after the legislation is enacted in parliament:
- to existing leases which require ESMs to be paid by the Tenant (any costs paid by the Landlord before the date the legislation is passed cannot be recovered), and
- new leases entered into after the legislation is enacted in parliament.
This amendment clarifies the confusion held since a VCAT Advisory Opinion in 2015 stated ESM obligations are the responsibility of the Landlord.
Disclosure Statement
The Landlord must provide a Tenant with the proposed lease and a disclosure statement at least 14 days before entering into a lease. This amends the current 7 day notice period under the Act.
Options to renew the Lease
Where the lease provides for an option to renew the lease for a further term, Landlords must provide a notice to the Tenant at least 3 months before the last date by which the option must be exercised. That notice must contain:
- The last date by which the option to renew may be exercised by the Tenant,
- The rent payable for the first year of the further term,
- The availability of an early rent review process and cooling-off period, and
- Any changes to the most recent disclosure statement provided to the Tenant.
This imposes a greater burden on Landlords to provide the rent payable at the start of the further term before the Tenant decides to enter into that further term.
Early rent review
Where the lease provides a market rent review at the commencement of the further term of the lease, the Tenant has 28 days to request an early rent review, and 14 days after that to consider exercising their option to renew the lease for another term. If the Tenant decides not to exercise the option to renew the lease, a 3 month extension after the end of the lease can be negotiated to allow both Landlord and Tenant to make alternative arrangements.
Cooling off period
Where the Tenant exercises their option to renew the lease which does not have an early rent review process, the Tenant has a 14 day cooling-off period to decide if they still want to exercise their option to renew the lease for the further term.
Security Deposits and Bank Guarantees
At the end of the lease, the security deposit, bank guarantee and any bonds must be returned within 30 days, provided the Tenant has fulfilled its obligations under the lease.
How can Sharrock Pitman Legal assist?
We have an Accredited Specialist in Property Law and we are well equipped to advise you of your rights and obligations as a Landlord or a Tenant under the Retail Leases Act. If you have any queries feel free to contact Andre Ong on (03) 8561 3317 or alternatively fill in the contact form below.
The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.
Liability limited by a scheme approved under Professional Standards Legislation.
Andre is a Principal of Sharrock Pitman Legal.
He heads our Property Law Group and is an Accredited Specialist in Property Law (accredited by the Law Institute of Victoria). He also deals with Commercial Law. For further information, contact Andre Ong on his direct line (03) 8561 3317.
