Business & Corporate: Own a shop? Look at these amendments to the Retail Leases Act

Retail leases are governed by the Retail Leases Act 1994 ('RLA'). This Act promotes fair and effective leasing relationships between tenants and landlords.

 The RLA has been the subject of some recent amendments which came into effect on 1 July 2017. Some of these changes also affect leases and disclosure statements which were prepared prior to 1 July 2017.

Changes that favour tenants:

1. Tenants do not have to pay outgoings that were not disclosed on the disclosure statement (other than taxes or levies imposed after the date of the disclosure statement).
2. If outgoings are underestimated on the disclosure statement and there is no reasonable basis for the underestimated value, the payment by the tenant may be limited to the underestimated amount despite the possible increases in outgoings.
3. Compensation for late or materially false disclosure statements is available to tenants who terminate the lease on this basis after 1 July 2017 (even if the disclosure statement was provided before 1 July 2017).
4. Landlords must return a tenant's bank guarantee within 2 months after a tenant complies with their obligations.
5. Mortgagee consent costs cannot be passed onto tenants.

Changes that favour landlords:

1. The minimum 5 year lease term has been abolished.
2. Management and service fees are now specifically allowed to be passed onto tenants.
3. The turnaround time for lodging or returning a signed lease to the tenant has been extended to 3 months (from 1 month) from when the tenant returns the lease.
4. There is a list of new excluded leases to which the RLA does not apply to (eg. market stalls, unless it is a permanent market).
5. Disclosure statements are to be given only for the initial lease agreement, and not for a resulting lease (e.g. renewed lease).

Other changes:

1. Retail leases for terms over 3 years must be registered at New South Wales Land & Property Information
2. The NSW Civil and Administrative Tribunal (NCAT) can now adjudicate retail lease disputes with a value of up to $750,000 (increased from $400,000)

Please contact our Andrew Frank or email Frank Law to discuss how you might be affected by these changes.

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Keywords: business & corporate, business, retail, lease, tenant, landlord 

This article is provided to the reader for general information. It is not legal advice. It was written by Zdenka Marinov & Emily Graham and edited by Andrew Frank.