March 14, 2017

Upcoming changes to NSW retail leasing laws

NSW RETAILS LEASING LAWS

The NSW Parliament recently passed the Retail Leases Amendment (Review) Bill 2016 (“the Bill”) which has achieved royal assent and is expected to commence shortly. The Bill introduces reforms to the Retail Leases Act 1994 (“the Act”) that governs NSW retail shop leases.

Some of the ways which landlords and tenants will be impacted include:

  1. Minimum term

The requirement for a minimum lease term of 5 years will be removed.

  1. Registration

Leases with a term of more than 3 years will need to be registered. The lease will need to be lodged within 3 months after it is signed.

  1. Disclosure of outgoings

Landlords will have stricter disclosure obligations for outgoings contributions. A tenant will not have to pay an outgoing if it is not disclosed in the landlord’s disclosure statement.

  1. Non-retail premises

If a premises is used wholly for non-retail purposes then it will be excluded from the Act. This includes ATMs, vending machines, public telephones, children’s rides, internet booths, private post boxes and certain storage uses.

  1. Compensation

If a tenant exercises its right to terminate the lease during the first 6 months due to the landlord’s failure to give a disclosure statement or due to a defective disclosure statement, the tenant can recover compensation from the landlord. This includes the reasonable costs of entering into the lease and fitout costs.

  1. Mortgagee consent fees

Tenants will not be liable to pay the costs of the landlord obtaining mortgagee consent to the lease.  

  1. Return of bank guarantees

Landlords will be required to return a tenant’s bank guarantee within 2 months after the tenant completes the performance of its obligations under the lease.

  1. Jurisdiction of tribunal

The monetary limit on claims for retail disputes arising under the jurisdiction of the Civil and Administrative Tribunal will increase from $400,000 to $750,000.

Conclusion

In what is hoped to increase transparency and reduce red tape for the industry, these changes will bring many NSW leasing requirements in line with other states and territories. Be mindful that each state and territory has its own laws governing retail leases.

Need further information about retail shop leases or other aspects of commercial law in Australia? Contact the experts at Rouse Lawyers today.